Private Stock & Equity

Not only can you invest your retirement funds in Wall Street, but you can invest them in Main Street as well. Small business is the backbone of our nation’s economy and the IRS allows retirement plans to hold shares of privately-held companies. This page will discuss how you can purchase equity in a private company with an IRA/401k plan and get all the associated tax advantages.

Things to Remember When Investing in Private Equity:

  • The IRS allows retirement plans to hold shares of a privately-held company.
  • Your IRA cannot purchase privately held equity that YOU already own.
  • If YOU have ownership and/or control of the company, restrictions may apply.
  • You need a self-directed IRA administrator (like New Direction) to invest in private equity with your IRA.
  • Investment documents are first read and approved by you, then signed by New Direction IRA on behalf of the IRA.
  • Investment earnings flow into the Self-Directed IRA account.

Frequently Asked Questions:

Q: Can I use my IRA to invest in a local community bank or other privately held businesses?
A: Yes, a retirement plan can invest in most types of privately held entities including C-Corps, LLCs, LPs and more.

Q: When using my IRA to invest in a private placement, how is the ownership titled?
A: Like all assets held within a retirement plan, the offering will be vested in the name of the your IRA (custodian/administrator for the benefit of Your Name, IRA#). This way any income that is generated will be returned to your retirement account tax deferred or tax free.

Q: Can my IRA invest in the LLC that I currently use to hold investment real estate:
A: If you or any disqualified persons currently own 50% or more of an entity, you are prohibited from buying into the entity with your retirement account.

Q: Besides private equity, what are alternative investments my IRA or qualified plan can buy?
A: You may purchase real estate, notes, options, precious metals, accounts receivable, timber deeds, crops, cattle, stock, bonds, mutual funds, certificates of deposit, anything which is not prohibited by the Internal Revenue code.

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