Proposed Legislation Negatively Impacting IRAs and Private Placements

Your financial security is our priority, and the relationship you have with ACCUPLAN is significant to us. That’s why we want to make you aware that Congressional Democrats have proposed changes to the laws governing individual retirement accounts (IRAs) as part of their $3.5 trillion reconciliation package. If enacted into law, these changes would have a direct negative impact on you and your ability to save for a secure retirement through an individual retirement account, like the one you have today at ACCUPLAN.

How would the proposed legislation affect me?

The proposed legislation would prohibit IRAs from holding privately-placed equity and debt securities and other investments that require the IRA owner to meet specific minimum financial, educational, or licensing requirements. For example, the legislation would prohibit IRAs from holding unregistered investments that are offered to accredited investors, like equity or debt investments in small businesses or investments in private funds. You may very well have investments in your IRA today that the proposed legislation would prohibit.

The bill would also prohibit IRA owners from investing in (1) non-publicly traded entities in which the IRA owner and related entities (including the IRA itself) own more than a 10% interest or (2) any entity in which the IRA owner is an officer or director, regardless of ownership percentage. By way of example, single-member limited liability companies or any investment in an entity in which an individual is a director or officer could no longer be held in an IRA.

IRAs holding any of the above investments would lose all of the tax advantages previously available to the IRA.

If the proposed legislation is enacted, you will no longer be able to purchase any of the above investment types in your IRA. Further, you will be required to dispose of any such investments that you currently hold in your IRA by no later than December 31, 2023, which could result in significant and previously unforeseen financial and tax consequences, including taxes and penalties associated with any assets that could not be sold and must be distributed from the IRA.

What can you do? Time is of the essence – Take Action Today.

Make your voice be heard. Contact your elected officials in the United States House of Representatives and Senate, and tell them:

  • You oppose limitations on IRA investment choice (Sections 138312 and 138314 of the House reconciliation bill). These under-the-radar provisions have never been publicly vetted and will have unintended and adverse impacts on you and countless other Americans who wish to save for a secure retirement through Main Street investments.
  • Specifically, the legislation:
  • Negatively impacts your ability to save for a secure retirement by limiting your choice and ability to diversify your retirement savings outside of the stock market.
  • Will likely cause you significant adverse financial consequences by forcing you to sell existing IRA investments at a depressed price by a publicized specific date, and may also cause significant negative tax consequences (including early distribution penalties) by forcing you to distribute from your IRA any investments that you are unable to sell.
  • You are also concerned that the legislation negatively impacts small businesses that employ everyday Americans to obtain the funding necessary to operate and grow their business and create jobs. The proposed bill eliminates the ability of suitable investors to participate in private capital-raising transactions through their IRAs, a source of funding on which many of these small businesses rely.

Not sure how to contact your U.S. Congressional Representative?                            

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At ACCUPLAN, as always – we will continue to advocate on your behalf for individual investor choice. If you have any questions about Sections 138312 and 138314 of the House reconciliation bill and how it will impact you, please contact your financial or tax advisor.

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