Many people are unaware that they can do anything with their IRAs besides investing them in stocks, bonds, and mutual funds. This is due to more than a lack of thorough investor education. When the Employee Retirement Income Security Act of 1974 established the IRA, the first institutions to develop IRA plans were large banks, mutual fund companies, and insurance companies. These institutions described plans that offered their products and those plans became the standards for IRA investing.

There is a broad range of investment opportunities in which IRAs can play a role. Some of these non-traditional investment opportunities include opening a franchise, investing in real estate, lending funds to businesses and homeowners, and purchasing rental properties. Setting up many of these business arrangements can be quite complex--which is another reason why many traditional IRA providers do not offer these types of investments.

The list of disallowed investments is quite small by comparison. IRAs cannot directly own land outside of the United States and its protectorates. IRAs cannot own collectible items like pieces of art, antique furniture, rare coins, or jewelry. The rule of thumb is that an IRA cannot own items that are considered to be for personal enjoyment, or items that immediately benefit the IRA owner or his or her relatives. Most other investments are allowed if you can find an IRA custodian that will accept it.

Investing Your IRA in a Franchise

As long as you do not personally run the franchise (or live in the back), your IRA can own a franchise. Before taking such a step, however, you should speak with a qualified IRA advisor with experience in such investments. There are a number of ways to run afoul of the IRA rules so you should speak with a qualified advisor regarding any investment, but especially when it comes to investing in franchises, real estate, or other non-traditional investments.