Ask the IRA Expert: Are There Any Special Rules Related to Investing in Livestock with an IRA?

By John Bowens4 Comments

I have several properties in my IRA already but have always been interested in raw land as a long term investment. Lately, I’ve read that some people will actually use their self-directed IRAs to invest in livestock. Is this a good idea or even possible? Are there any special rules related to livestock investing?
~Allison M.
Thank you for your question, Allison.
While I am unable to give any investment advice in order to tell you what qualifies as a good idea for an investment, I can tell you that this type of investment is certainly possible with a self-directed IRA. Many of Equity Trust’s clients have become involved with this little-known investment opportunity.
The observation has been made by many individuals just how potentially profitable livestock investing can be. With the demand for livestock ever-growing, whether for rare commodities such as wool, or for meat, the desire to invest in livestock is certainly understandable. I’ve heard from clients who are investing in everything from cattle and swine to llamas and alpacas to thoroughbred horses. This type of investment taps into an income source that is arguably under-used inside of self-directed retirement accounts.
Because this is held inside of your IRA to effectively keep an “arms-length distance” away there are a few rules that apply. Your IRA is responsible for the maintenance of the investment. You cannot keep the livestock on your property. Because you are a disqualified individual in regards to your IRA, you could not purchase livestock you already own. You would not be able to use livestock for personal use, and of course, all revenue generated must return to your IRA. All other IRS rules apply but in essence, livestock investing functions very much like any other sort of alternative investment; it’s just tapping into a niche that investors are becoming increasingly aware of.
Thanks again for your question, Allison and happy investing!
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