Retirement accounts
What Can You Hold in a Roth IRA? The Short List of What You Cannot
The tax code bans only two things from a Roth IRA: life insurance and collectibles. Everything else you cannot buy is your custodian's rule, not the law's.
Almost anything a brokerage sells. The tax code bans exactly two categories of asset from a Roth IRA, and every other "you cannot buy that" you will run into comes from your account provider rather than from Congress.
That inversion is the useful thing to know here. Most people arrive at this question braced for a long list of prohibitions. The list is two items long.
The IRS puts it about as plainly as the IRS puts anything: there is no list of approved investments for retirement plans. The statute works by exclusion. It names what is out and says nothing about the rest.
The tax code bans two things, and that is the whole list
Section 408(a)(3) requires the governing document of an individual retirement account to state that no part of the trust funds will be invested in life insurance contracts. Notice the shape of that rule. It is not a penalty for holding insurance. It is a condition of the account being an IRA at all. This is one reason permanent policies get sold as standalone retirement vehicles rather than as IRA holdings.
Section 408(m) supplies the second ban. A collectible is defined there as any work of art, any rug or antique, any metal or gem, any stamp or coin, any alcoholic beverage, or any other tangible personal property the Treasury specifies.
The enforcement mechanism matters, because it is not a fine. Acquiring a collectible inside an IRA is treated as a distribution equal to what the account paid for it. A $5,000 painting bought inside a Roth IRA produces a $5,000 deemed distribution the moment the purchase settles, and the painting still sits in the account.
The bullion exception is narrower than the advertising suggests
Section 408(m)(3) carves out two things, and they are not carved out on the same terms. The first is certain coins: US gold, silver and platinum coins issued under title 31, and any coin issued under the laws of a state. The second is gold, silver, platinum or palladium bullion meeting the minimum fineness a contract market requires for metals delivered against a regulated futures contract.
The custody condition attaches to the bullion alone. The statute ends "if such bullion is in the physical possession of a trustee described under subsection (a)", and that clause reaches the bullion in (B), not the coins in (A). It is a distinction worth getting right, because it is the one most often reported backwards.
That last clause is where home storage pitches collide with the statute. Metal in a safe at your house is not in the physical possession of a trustee.
Everything else on a brokerage menu clears
Individual stocks, corporate and Treasury bonds, CDs, mutual funds, index funds, and exchange traded funds of every stripe sit outside both bans. None of them is tangible personal property and none of them is a life insurance contract, so section 408 never reaches them.
That answers the version of this question people actually type. A Nasdaq-100 tracker such as QQQ is an ordinary exchange traded fund, and the statute is silent on ordinary exchange traded funds. Whether a retirement account concentrated in one sector-heavy index behaves well is a separate question, and not one the tax code weighs in on. The same holds for a fund tracking the S&P 500, for a total bond market fund, and for a single share of anything listed.
The wrapper changes the tax, not the product
Inside a Roth IRA, dividends are not reported, rebalancing triggers no taxable event, and selling a winner generates no 1099-B. That is real, and over decades it compounds. It also does nothing to the investment itself. An expense ratio is charged on the same schedule inside the wrapper as outside it, and the layers of cost that never appear on the expense ratio line behave identically in both places.
Tax-free growth applied to an expensive fund is an expensive fund with a better tax treatment. The wrapper is a multiplier on the outcome, not a fix for it.
The limit that actually binds is your custodian
Here is the sentence that resolves most "can I buy X in my Roth IRA" questions. The IRS states that IRA trustees are permitted to impose additional restrictions on investments, and offers real estate as the example: the law does not prohibit an IRA from owning it, but many trustees decline to administer it because of the administrative burden.
So the practical menu depends on who holds the account.
| Where the Roth IRA lives | What is typically available |
|---|---|
| Full-service brokerage | Anything exchange listed, most mutual funds, Treasuries, CDs |
| Bank or credit union | CDs and savings, sometimes a short mutual fund list |
| Fund company, held direct | That company's own funds, often nothing else |
| Self-directed custodian | Real estate, private notes, private shares, for a fee |
A closed menu is a contract term. It carries no legal judgment about the asset, which is why the same holding can be routine at one provider and impossible at another. And because nothing prevents holding more than one Roth IRA at more than one provider, the constraint is softer than it looks. The annual contribution limit is shared across every Roth IRA a person owns. The menus are not.
This is also the structural difference between a Roth IRA and the Roth side of a workplace plan. A plan menu is chosen by a committee and changed by a committee. An IRA menu is chosen by whoever the account was opened with, and that choice can be undone by moving the account.
None of this governs whether the account can be funded in the first place. That runs on the 2026 MAGI phase-out, $153,000 to $168,000 for a single filer and $242,000 to $252,000 for joint filers, and on the contribution route used above those thresholds.
Prohibited transactions turn a legal holding into a taxable one
Section 4975 restricts who the account may transact with, not what it may own. The listed categories cover any sale, exchange or lease of property between the plan and a disqualified person, any lending of money or extension of credit between them, any furnishing of goods, services or facilities, any transfer to or use by or for the benefit of a disqualified person of plan income or assets, and any act by a fiduciary dealing with plan assets in his own interest.
You are a disqualified person with respect to your own IRA. So are your spouse, your ancestors, your lineal descendants, and the spouses of those descendants.
The word doing the work is "benefit"
Owning an asset is not the problem. Deriving personal use from it before distribution is. A rental property held inside a Roth IRA is an ordinary investment right up until a family member stays in it for a weekend, at which point plan assets have been used for the benefit of a disqualified person. The same logic rules out lending the account money, personally guaranteeing a loan the account takes, or paying the account's expenses out of your own pocket.
Section 408(e)(4) adds a narrower rule with the same flavor. Where the account, or any portion of it, is used as security for a loan, the portion so used is treated as distributed. That single sentence shapes the next section.
Margin, options, and what custodians typically permit
Because the account cannot be pledged, an IRA cannot carry a margin loan in the ordinary sense. There is no collateral available to lend against without tripping 408(e)(4). Brokers work at the edges of this with limited margin arrangements that let trades settle without waiting on cash settlement, but those do not extend borrowing power.
That one constraint shapes the whole options question. A strategy whose downside is open-ended has to be collateralized by something, and in an IRA the only candidates are cash already there or shares already held.
| Strategy | Backed by | Typical availability in an IRA |
|---|---|---|
| Covered call | Shares already in the account | Commonly permitted |
| Cash-secured put | Cash set aside in full | Commonly permitted |
| Long call or long put | Premium paid up front | Commonly permitted |
| Vertical spread | The offsetting leg | Sometimes, at a higher approval tier |
| Naked call or naked put | Margin | Generally not permitted |
That table describes what brokers tend to authorize. It is not a ranking, and the pattern in it is mechanical rather than editorial: fully collateralized positions clear the pledge rule, and positions that would require borrowing do not.
Can you lose money in a Roth IRA? Yes, all of it
The wrapper changes the tax treatment of what happens inside it. It changes nothing about the risk of what is inside it. A Roth IRA holding one stock that goes to zero is a Roth IRA worth zero. Nothing in section 408 or 408A softens a drawdown, and no insurance sits behind the market value.
There is an asymmetry here worth naming, and it runs against the Roth on the downside. A realized loss in a taxable brokerage account can be set against realized gains. A loss inside a Roth IRA cannot, because the sale is not a taxable event and therefore produces nothing to deduct.
On those assumptions the Roth finishes $450 ahead when the position gains 30% and $450 behind when it loses 30%. The $3,000 loss is the same $3,000 in either account. The wrapper moved the tax, not the market.
Which reframes the question this article started with. The code will let a Roth IRA hold nearly anything a brokerage sells, and it will let that holding go to zero without comment. Its two bans are about the character of the asset, not its riskiness. Everything past those two lines is a menu the custodian offers and a decision the account owner makes.