I opened a new Roth for my wife last month, "applied" for a Folio account and was "approved." First trades settled successfully on Friday.
They are not placing any restrictions on new IRA accounts that attempt to use Folio.
The only restriction is a very clear and unambiguous notification on the LC website that it isn't permitted.
At this point LC and the IRS can claim you were warned.
I am still puzzled by why LC continues to electronically permit IRA account / Folio trades. That's a question I'd love to see asked and answered.
Currently I would never consider trading notes on Folio from my IRA. Call me a wimp, but it's liable to be quite a mess.
When I checked out LC as a potential investment this past April there was no such prohibition (at least not one known to LC with notification provided to its customers). I decided at that time that an LC investment was appropriate for some of my IRA. This decision was in no small part due to the liquidity provided by Folio should I decide to liquidate my account. Only months later after I'm my first round of funding is fully invested did I learn (not from LC but via a forum post here) that I have no option to liquidate and must hold all notes to maturity in 3-5 years. Kind of an important point to omit from the prospectus don't you think? Gee, I hate it when the rules are changed in the middle of the game.
Eventually LC will provide an IRS compliant mechanism (Prosper already provides one I understand). Until then I'll hold back on adding funds to to my LC IRA account to see the details.