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Wouldn an investment in a viatical be a good addition to my IRA?

April 26, 2017addition good Investment IRA viatical

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Wouldn an investment in a viatical be a good addition to my IRA?

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Investing money from an individual retirement account (IRA) in a viatical settlement contract carries special risks. Internal Revenue Code section 408(a)(3) requires that “no part of trust (IRA) funds will be invested in life insurance contracts.” This means that the Internal Revenue Service may not allow you the tax benefits of an IRA if you invest in a viatical settlement contract. Even if such an investment is allowed, you should carefully consider your age, the life expectancy of the viator, and the difficulty in predicting life expectancy before investing IRA funds in a viatical settlement contract. Since death benefits are not paid until the viator dies, you may encounter a problem taking annual distributions from your IRA that are mandatory beginning at age 70. If the funds are not available to take the mandatory distribution, you could be penalized by the IRS.