[Update 2/29/12: Prosper announced the minimum is now $5,000 and they will waive all IRA fees if investors have $5,000 invested within two months of opening the account – they have a new page on their site about it. This is the same deal as the Lending Club IRA]
This week Prosper is set to announce the launch of an IRA option for investors. They did a soft launch of their IRA product back in November to a handful of customers but it is now available to everyone. There will likely be an announcement from Prosper on their new IRA some time this week. But you can go to www.prosper.com/ira right now to open your account.
The IRA will be managed by Sterling Trust, one of the leaders in self-directed IRA’s. Because this is an IRA product and Sterling Trust will be the custodian of your funds it is not as simple as just opening up a regular account at Prosper. You will have to open an account at Sterling Trust and then transfer your money there before being able to invest in Prosper notes.
You Will Need $10,000 to Open A Prosper IRA
You will be able to open a new IRA or rollover an existing IRA or 401(k) into Sterling Trust for investing in Prosper notes. But there is a catch. There is a $10,000 minimum to open an account. But the good news is that Prosper will waive all IRA management fees if you invest all your $10,000 within two months of opening your account.
This is a big deal for investors. Until now, you have had to jump through expensive hoops in order to invest in Prosper notes through an IRA. But now, it will be a relatively simple process. Peer to peer lending is an investment that is perfectly suited to an IRA. With all interest taxed at the standard tax rate, investing through an IRA will make a huge difference in the real return for many investors. I have been hoping and pushing for a Prosper IRA option for over a year now, so I say it is about time – Lending Club has had an IRA option since 2009.
What do you think? Will you be taking advantage of the new Prosper IRA? As always I am interested to hear your comments.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.