Roth IRAs and inflation-protected securities

Can I buy a Series I Savngs Bond through TreasuryDirect as a Roth IRA? If not, how do I purchase an I bond or TIPS and establish a Roth IRA with it?

Tom's response

The rules say you can't hold a Series I bond in a Roth IRA. TreasuryDirect doesn't allow for any type of IRA registration. Legacy TreasuryDirect doesn't support Savings Bonds, but in theory does allow for IRA registrations, however, you still need a financial institution to act as custodian or trustee of the IRA and I've yet to find one that will do that.

If TIPS will work, you have two choices. First, you can set up a Roth IRA with a mutual fund company that has a TIPS fund and invest the Roth money there. This choice is typically better for new or small Roth IRAs because of lower initial investment requirements.

The other option is to set up a self-directed Roth IRA with a brokerage firm and then invest the Roth money in TIPS. This choice is typically better for larger Roth IRAs. With this option you can invest directly in TIPS, in a TIPS mutual fund, or in a TIPS exchange traded fund.

An example of a TIPS mutual fund would be
Vanguard Inflation-Protected Securities (VIPSX). A TIPS exchange traded fund is iShares Lehman TIPS Bond (TIP).