I have been told only "dollars" can be put in a Roth IRA. But I need to find a legal and IRS-acceptable-way to deed real estate into a Roth IRA.

I understand one can put into his or her Roth IRA only $2000, or the amount earned during the year, whichever is less. Assuming one owns a piece of land valued at $2000,and that person made at least $2000 in the year, how can that person make his or her $2000 contribution to the Roth IRA --in the form of land--so that when the land is sold in later years, the profit will remain under the tax protection of the Roth IRA, as it would if it were stocks or bonds?

Surely there must be a way, or someone who is developing a way. After all, Irrevocable Living Trusts and Revocable Living Trusts were invented to address legitimate needs such as the need to avoid probate. This too is a legitimate need that needs a solution. Any ideas? I would greatly appreciate your help in finding an answer, or in directing me to individuals who may have answers. I will gladly send $100 to the first person who can provide me with a legal and IRS-acceptable-way to deed real estate into a Roth IRA.

Thank you for your time.

Mr. Martin

Dear Mr. Martin,

Put away your $100, no one can give you a legal way to deed the land to the Roth, because there is no legal way. The LAW says specifically that only money can be contributed. That's it, end of discussion.

You also COULD NOT put the cash into the roth and then sell the land to the roth, since that is an act of self dealing that is also prohibited BY LAW.

As an aside, if you could get the land into the roth, how do you propose to pay the real estate taxes? That money would have to come from the roth itself, and you could not contribute any more since you're limited to $2,000 per year.

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Barry Picker, CPA/PFS, CFP
New York, NY

I agree--keep your $100 in your wallet.

There is no legal way to contribute land to an IRA; contributions must be in cash. Securities in one qualified plan or IRA may be rolled over or transferred to an IRA, but "original" contributions may only be in cash.

However, there are two remote possibilities that involve HOLDING land (after a fashion) within an IRA. Unfortunately, neither is going to work for the situation you described, for the "self-dealing" reason that Barry mentioned. The two options I am thinking of are to purchase a limited partnership that owns land or to purchase a deed of trust on the land. Note that in both of those cases, you don't really own the land. I believe that only a handful of IRA custodians allow deeds of trust and a few more allow LPs.

How about sending that sawbuck to United Way! You just got some advice that will keep you out of a lot of trouble.

It is deductable, of course.

I have no doubt that SOMEBODY will inform our questioner that there IS, in fact, a "perfectly legal" way to do what he's attempting.

The folks out there hawking "Constitutional Trusts" surely don't want to let an opportunity like this slip through their fingers!


Maybe one of the former [?] promoters of "Charitable Reverse Split Dollar" would care to take a crack at it.




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John L. Olsen, CLU, ChFC
Olsen Financial Group
St. Louis, MO
314-909-8818

Gentlemen, would your responses be the same if the original question posed were, "can a contractual right to purchase real estate be assigned (contributed) to an IRA?"

I am guessing that the answer(s) will be in the affirmative.

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Christine,

Only cash can be contributed. No land, no stock, no contractual rights, nothing but cash.

To put it another way, if you want to contribute to any type of IRA, SHOW THEM THE MONEY!


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Barry Picker, CPA/PFS, CFP
New York, NY