Mineral Rights in your IRA

By Steve O'Reilly

Many Americans are unaware that they have the freedom to direct the investments within their Individual Retirement Account (IRA). Most people are under the impression that their current Administrator offers a menu of investment choices and their IRA will be managed with a rate of return predicated on the success or failures of the Stock and Bond Markets. However options are not that limited. What is less known is that the IRS doesn't stipulate what kind of investment you hold in your account. Therefore anything from Real Estate, promissory notes, LLC's, Hedge funds and Mineral Rights are all allowable within your IRA.

The reason to Self Direct your IRA is twofold -

1.) an IRA is a tax free/tax deferred vehicle so the potential growth is magnified if no taxes are removed and

2.) it gives clients peace of mind knowing they are investing in something that they understand and control

For example, if you were going to purchase a Mineral Rights deed with personal funds you would be subject to paying tax on any Royalties that you would gain in the form of income. However, if your IRA purchased the same Mineral Rights deed it would not be subject to any tax until the individual who owns the account starts taking distributions from the plan.

For Buyers, this vehicle offers them a way to diversify their retirement plan and gives them the ability to invest in an asset they are comfortable with. For Brokers, IRA investing opens up approximately 4 Trillion dollars that is currently tied up in the Stock market.

Self Directing your IRA is a very simple process and the potential returns can be much greater then a retirement plan with traditional investments.

Feel free to contact me to learn more about the process and the value of controlling your IRA account. Hopefully it can help you do more business!

Is there any way to move currently owed mineral rights into an IRA prior to any drilling? I currently have an account at Entrust in Houston, but asking the question on behalf of my parents. Would they need to appraise the mineral rights first? They are 80 years old, so have no earned income, so assume opening a new IRA is out of the question. If they moved an existing IRA to a self directed IRA, any way to get mineral rights moved to it?

Thanks Mike for your response. Think I was not clear on my comment. I mentioned that I have a self directed IRA with Entrust only as information so that others were aware that I am familiar with doing self directed IRAs. I was hoping that my parents could open a self directed account and move their mineral rights to it, but since they have no earned income, I assume this is out of the question. Guess the best way is to move an existing IRA to self-directed IRA, then buy mineral rights (from non-family member?) from the IRA?


We inherited mineral rights. If we lease those rights, are we required to pay income tax on the signing bonus and the royalties? Would this be considered part of the estate (which was not large enough to incur inheritance taxes)?

Thank you, Randall