Buying Government Bonds in your IRA

• 1). Free up cash in your IRA account. A self-directed IRA is usually held by a brokerage firm, and you make the decisions regarding what you will buy in that account. You may have to raise cash in your IRA by selling something already in the account. Once you have cash, you can purchase government bonds with that cash. Ask your broker for assistance in this process.
  
  
• 2). Buy government bonds with your bank-held IRA. If you hold your IRA account in a bank, you may have the money in that account invested in certificates of deposit (CDs). Unless the IRA plan at the bank specifies CD investments only, there is no reason you cannot purchase government bonds in that account. Ask your branch manager about the procedures for doing that at your bank.
  
  
• 3). Choose a fund that contains government bonds. Most mutual fund companies and insurance companies that act as trustees for IRAs offer only money market funds and mutual funds to choose from in their IRA accounts. If this is the kind of IRA account you hold, there are probably several types of bond funds from which you may choose, including short term, intermediate term or long term government or corporate bond funds. You may have to sell one or all of the investments you already own in that account in order to purchase a position in a fund that invests in government bonds.
  
  
• 4). Transfer or roll your funds over into a more versatile account if your IRA account cannot accommodate an investment in government bonds. Look for a self-directed IRA, which is normally available through a brokerage firm or a bank investment division.
  
  
• 5). Decide which maturity to buy. Treasury bills mature within a year. Treasury notes have maturities out to ten years, and treasury bonds have maturities that range out to thirty years. Unless you are purchasing your bonds during times of very high interest rates and you have at least thirty years until you retire, you should not purchase a bond longer than ten years.