An individual retirement account (IRA) is not commonly considered a liquid asset as there are penalties and taxes involved with converting the investment account into cash. A liquid asset is defined as something of worth that can be converted into cash quickly; bank accounts, bonds, mutual funds, stocks, exchange traded funds, certificates of deposits and cash fall into this category, as noted by the Federal Reserves.Continue Reading
Certain kinds of IRAs are considered liquid assets as they don't have penalties involved with withdrawing funds. A Roth IRA doesn't have the restrictions of paying tax that a traditional IRA requires when funds are taken out as long as the money being withdrawn is from the account holder's contributions and not the earnings from the investments.
IRA funds can also be invested in different ways, including in stock options, rare metals and even real estate, states Forbes. These investments are considered liquid assets as they can be accessed quickly with little consideration for taxes and fees.
A traditional IRA holds money invested by the account holder tax free while earning interest. When the money is taken out, the owner of the account is required to pay subsequent tax as dictated by the IRS.Learn more about Investing