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Be careful with 'collectibles'
Be careful with 'collectibles' © P.Kanchana/Shutterstock.com

Be careful with 'collectibles'

Before doing anything exotic with your IRA, make sure it's allowed by the IRS -- because many investments aren't. Generally, the tax agency bars investment in what are known as "collectibles." These include:

  • Artwork.
  • Antiques.
  • Stamps.
  • Gems.
  • Any coins that aren't specifically allowed.

And don't bother trying to invest in a vintage bottle of Bordeaux: Alcoholic beverages also are excluded as an IRA investment.

All of this means that if you use a traditional IRA to invest in collectibles, "the amount invested is considered distributed to you in the year invested," according to IRS guidelines. Translation: It's taxable.

Furthermore: "You may have to pay the 10% additional tax on early distributions," the IRS warns.

For more information on IRA investments, read IRS publications 590-A and 590-B.

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