Private Equity Investing Through An IRA

Private Equity Investing In An IRA

There are so many ways you can invest through an IRA. The reason you don’t know about them is that most custodians and financial institutions don’t allow investments, other than the typical stocks and bonds. because it doesn’t benefit them or just isn’t their expertise.

One of the many different investments that the IRS allows in an IRA or 401k is to acquire private equity. Private equity is an ownership interest in a private company. One of the biggest benefits to this is the tax benefits associated with the retirement account.

When investing in private equity you don’t have public disclosure laws that are associated with publicly traded securities. Because of this, you can capitalize on private equity opportunities. Adding in the returns that can come from a private equity opportunity plus the tax-deferred or tax-free benefits that come from the retirement account it really makes for a great pairing of a retirement investment option.

What Are The Benefits To Private Equity Investing In An IRA

  • Another way to diversify your retirement account
  • You get to choose the companies in which the IRA invests
  • You can buy, sell and exchange equity without any taxes to worry about
  • The ability to invest into a myriad of different types of companies. From start-ups to limited partnerships, limited liability companies, c-corporations and even more

Rules To Investing In Private Equity Through IRA

  • Your IRA cannot purchase any private stock that you already own
  • You nor any disqualified persons can be employed by the company while the IRA owns an equity position
  • All investment earnings must low into the self-directed IRA account
  • Earnings from the entity may be subject to UBIT
  • The IRA is the owner of the private equity and not the holder of the IRA. Because of this all relevant fees and costs must be paid by the IRA account and all the gains go back to the IRA account
  • Legal documents that are owned by the IRA must be in the name of the IRA and not your personal name.

The great thing about private equity investing is that you have the control to invest with your IRA in practically any private company you wish. Of course, there are certain general rules that you must follow that I mentioned above. Also, it is important to remember that since you are the one with control it is also your duty to perform the appropriate due diligence and invest wisely.

Take advantage of the diversification that can come through private equity investing through a self-directed IRA. If you have any questions or need any more information on private equity investing through your IRA contact us and we can help you get started today.

Author:

Comments are closed.