Can I Invest in Stocks with my Checkbook Controlled IRA or Solo 401(k)?

by Peter Rizzo

Life Settlements in a Retirement Account? Think Again.

By the rules, yes, but there is a caveat. You must find an institution that deals on the exchange that you want to trade in. Most private offerings will let an LLC owned by an IRA or a checkbook controlled Solo 401(k) invest, but the large financial institutions have ceased to let LLCs owned by IRAs or trusts trade on their platform.

In the past, Ameritrade and E*TRADE have been extremely popular with Checkbook IRA clients, but because of recent changes in their policies and the explosion of checkbook control retirement plans, they decided you must have an IRA with them to trade.

A little birdie told me that the checkbook-controlled products undermine their goal of controlling all of a person’s investment portfolio. Checkbook IRAs and Solo 401(k)s have always been the most useful for alternative investments, but lately, there has been an increase in popularity of people venturing into the stock market with them.

The only solution right now is to open an IRA with their favorite institution and transfer whatever percentage of cash in their portfolio they want to invest in stock and mutual funds and other traditional products. As of this writing, Solo 401(k)s can still set up trading and checking accounts with Charles Schwab, although their call-in advisors are not very knowledgeable about this.

There’s an account called a Master Retirement Account with Schwab that can be used with the Solo 401(k). We are continuing to search for a solution for those that want to invest in traditional stocks and funds.

Until then, the split approach works the best.

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