Lending Club IRA: All About Lending Club’s Retirement Accounts

Lending Club IRA: All About Lending Club’s Retirement Accounts

Last year, peer-to-peer lending company Lending Club began offering individuals the option to setup an IRA to serve as a tax-advantage way to invest through Lending Club. Here’s everything that you need to know about the Lending Club IRA.

Before considering a Lending Club IRA, you must first consider whether or not Lending Club is an appropriate investment for an individual retirement arrangement (IRA). Since you will be using the account to plan for your retirement, you want to earn a good enough rate of return so that you can retire comfortably, but don’t want to take on any more risk than necessary so that you can be sure that you will be able to retire when you reach age 65.

Making loans to other people through peer to peer lending websites is a relatively new type of investment. Currently Lending Club investors have about a three year track record of making rates of return of about 9% on their money. This is very competitive with what mutual funds have averaged over a long period of time, but Lending Club doesn’t quite have the 70 track record  that the S&P 500 might have, but it does sport much lower volatility than the stock market does.

You probably don’t want to make loans through Lending Club as your primary retirement vehicle, but if you already have a fully-funded 401(k) plan, 403(b) plan or pension plan, investing through a Lending Club IRA might be a way to invest money outside of traditional stock and bond choices.

Lending Club allows investors to open all sorts of retirement arrangements, such as a Traditional IRA, Roth IRA, Simple IRA or a SEP IRA through a partnership in which EntrustCAMA serves as the administrator as the account.

Investors that fund more than $5,000 into their Lending Club IRA can qualify for a “no fee” IRA. Here’s the fine-print from Lending Club’s website: “To qualify for a no-fee IRA you must have an initial minimum balance of $5,000 or more in Lending Club Notes and maintain this invested balance for the first 12 months. To continue to qualify for the no-fee IRA after the first year, you must maintain an invested balance of $10,000 or more in Lending Club Notes. All account balances are determined as of the last business day immediately prior to the anniversary date of the opening of your account. An annual fee of $100 applies to accounts that don’t meet these requirements.”

This article (Lending Club IRA: All About Lending Club’s Retirement Accounts) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.