Roth IRAs and inflation-protected securities
Friday, April 14th, 2006
Categorized as: Savings Bonds and competitive investments • Series I US Savings Bonds • TIPS
Can I buy a Series I Savngs Bond through TreasuryDirect as a Roth IRA? If not, how do I purchase an I bond or TIPS and establish a Roth IRA with it?
TreasuryDirect doesn’t allow for any type of IRA registration. Legacy TreasuryDirect doesn’t support Savings Bonds, but in theory does allow for IRA registrations. It’s also technically possible to register paper Savings Bonds to an IRA. However, you still need a financial institution to act as custodian or trustee of the IRA and I’ve yet to find one that will do that for paper Savings Bonds.
If TIPS will work, you have two choices. First, you can set up a Roth IRA with a mutual fund company that has a TIPS fund and invest the Roth money there. This choice is typically better for new or small Roth IRAs because of lower initial investment requirements.
The other option is to set up a self-directed Roth IRA with a brokerage firm and then invest the Roth money in TIPS. This choice is typically better for larger Roth IRAs. With this option you can invest directly in TIPS, in a TIPS mutual fund, or in a TIPS exchange traded fund.