Private Placements in an IRA
Private placements in a self-directed IRA are investments in privately held entities, such as companies, small businesses, or funds. Your IRA can invest directly into a company or it can invest in a fund with other investors. It can also loan money to a business in the form of a debenture or convertible note. Dividends are tax sheltered, deposited directly into your IRA.
These are not publicly traded securities, so you rely on your personal knowledge and experience to invest in private placements in a self-directed IRA. Private investment options include: transactions structured for oil and gas development, commercial and multifamily real estate, hedge funds, startups, and more.
FOUR TIPS FOR PRIVATE PLACEMENTS IN AN IRA
Private placements are often exempt from Securities and Exchange Commission (SEC) registration and reporting requirements. It’s important to understand how they work before you invest.
- Due diligence: Investigate all aspects of private placements including the people involved. This can help avoid fraudulent activity.
- Eligibility: SEC private investment rules usually require offerings be made only to “accredited” or “sophisticated” investors who can assess the risks of the investment.
- Easier access: Crowdfunding laws make access to some of these offerings easier for the general public, which opens the potential to invest in private placements in a self-directed IRA.
- Investor awareness: The SEC published Investor Alert: Self-Directed IRAs and the Risk of Fraud to provide helpful advice and descriptions by the government of popular fraudulent activity regarding self-directed IRAs.
Advanta IRA is a retirement account administrator that specializes in empowering you to take control of your retirement using self-directed IRAs. We offer no investment, financial or legal advice. You are required to perform your own due diligence pertaining to each and every aspect of all investments you choose to make. We operate as your support in areas of placing investments you instruct us to make on your behalf, and it is important that you are fully aware of the legal, tax and regulatory requirements for the investments you make.
