P2P Lending Firm, Lending Club, has recently announced an option to for investors making P2P loans to invest through an individual retirement arrangement (IRA), allowing tax-free investing in the fledgling peer-to-peer loan industry.
Lending Club has begun offering its investors the ability to open up traditional IRA accounts, Roth IRA accounts and simplified employee pension (SEP) accounts to. Like other retirement accounts, the money will go tax-deferred or tax-free until retirement.
The company was able to make these accounts available by partnering with EntrustCama, which is a division of the Entrust Group, which is the third largest self-directed retirement account custodian. The Entrust Group has 30 offices in the United States and serves as a custodian for tax-advantage retirement investments, much in the way that Vanguard or Fidelity would for a retirement account invested in stocks or bonds. By signing up for an IRA with a firm that allows for self-directed accounts, you can invest in a broader range of investments, including Lending Club Notes.
Lending Club boasts that their new retirement account option has no monthly fees and allows investors to transfer funds or rollover your existing 401k or IRA accounts. Lending Club’s IRA option has a minimum opening balance of $15,000.
Although Peer-to-Peer lending has gained a larger foothold in the United States, it’s still an alternative investment and should be considered as such. Typically, most investment advisors will suggest that investors do not put more than 10% of their nest-egg into an investment that has not demonstrated consistent returns for more than a decade.
