Self-Directed IRA Private Equity
Invest in private companies using your IRA.
Self-directed IRA private equity investments enable you to leverage your retirement dollars in privately held companies such as startups, LLCs, and private funds instead of traditional stocks or bonds.
By combining the tax advantages of an IRA with the massive earnings potential of private fund investments, self-directed IRA private equity investments help produce massive wealth.
How massive? This is the strategy that Peter Thiel used to invest in startups and make billions of dollars, tax-free, inside his self-directed Roth IRA.
Use any self-directed account to get started in private equity investments, including traditional and Roth IRAs, SEP IRAs, SIMPLE IRAs, and Solo 401(k)s.
Why Invest in Private Equity with a Self-Directed IRA
- Tax-deferred or tax-free growth: Compound growth inside a private equity investment in a tax-deferred account (Traditional) or tax-free earnings (Roth).
- Higher return potential: Successful private equity investments can earn you millions and have no limit to their growth.
- Portfolio diversification: Private equity investments are safe from volatile stock market swings.
- Hands-on investing: Private equity investments enable account holders to exercise at least some control over the assets through various means, including board seats, voting rights, and strategic decision-making privileges.
Combine High-Growth Investments with Tax-Advantaged Compounding
Private equity inside a self-directed IRA gives long-term investments the ability to compound without annual tax drag.
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What is Private Equity?
Private equity is funds held in private companies rather than publicly traded stocks. This can include startups, small businesses, private funds, or limited partnerships.
With an SDIRA, you can use tax-advantaged dollars to buy ownership stakes in these private entities. Unlike Traditional IRAs, SDIRAs permit a broader range of alternative investments. The goal is to grow your retirement savings through non-traditional assets with potentially higher returns.
Private Equity Investments Inside a Self-Directed IRA
C Corporations
Convertible Notes
LLCs & Limited Partnerships (LPs)
Startups & Small Businesses
Private REITs, Hedge Funds, and Pooled Investment Funds
Equity Crowdfunding
Land trusts
Invest in Private Equity with a Self-Directed IRA In 4 Easy Steps
Ready to move forward with a promising private equity investment? Follow these steps to get started:
At Horizon Trust, we believe in turning dreams into reality. Founded by Greg Herlean, who has masterfully managed over $1.3 billion in real estate transactions, our mission is to empower you to take control of your financial destiny using the tax-free advantages of a Self-Directed IRA. Retire wealthy.
Here’s how it works:
STEP 1
Open and Fund Your SDIRA
- Work with Horizon Trust to open and fund your account. Private equity investments can be substantial, requiring you to rollover funds from a previous account or maximize annual contributions.
STEP 2
Perform Due Diligence
Research market opportunities, organizational management, the entity’s financial standings and forecasts, and legal structure before investing.
STEP 4
Manage Your Investment
All proceeds, interest, and dividends must stay in the account to maintain tax-advantaged status.
You can access earnings through qualified withdrawals, such as those in retirement, or for specific events under specific circumstances, such as a down payment for your first home or qualifying educational expenses.
Disclaimer
Horizon Trust Company is an independent passive Custodian and is not associated or affiliated with and does not recommend, promote or advise any specific investment, investment opportunity, investment sponsor, investment company or investment promoter or any agents, employees, representatives or other of such firms or entities. Investments are not FDIC Insured, offer no bank guarantee and may lose value.
Learn About Self-Directed Private Equity Investments
Self-Directed IRA Private Equity Investing Rules
Investments inside self-directed IRAs are highly regulated and breaking these rules can result in costly penalties to your account.
Keep these rules in mind when managing self-directed private equity investments:
- You cannot invest in any company or organization in which you or a disqualified person has an ownership stake.
- Investments made with SDIRA funds must remain in your SDIRA portfolio, and all earnings and any expenses must flow to and from the SDIRA.
- You cannot invest in prohibited assets, such as alcohol, life insurance, or collectibles.
- If the private equity investment generates business income, or if you’ve financed a portion of the investment, unrelated business taxable income (UBTI) rules may apply.
How to Rollover Funds Into Self-Directed Private Equity Investments
You can move existing IRA funds into an SDIRA for a private equity investment without penalty.
However, this is referred to as a transfer. A rollover refers to the movement of funds from a qualified account, such as an employer-sponsored 401(k).
To ensure a successful rollover or transfer, keep the following in mind:
- Account structure matters: Generally, transfers should be made between like accounts to avoid tax implications. In other words, funds from a traditional IRA should be moved to a Traditional SDIRA. Those from a Roth IRA should be moved to a Roth SDIRA.
- Follow rollover rules: You can typically choose between a direct rollover and an indirect rollover. Direct rollovers move funds directly from one account to another — at no point will you take custody of the funds. During an indirect rollover, you take custody of the funds with the intention of redepositing them into the new account. You must complete the transfer within 60 days to avoid taxes and penalties.
Managing Unrelated Business Taxable Income
If you financed your private equity investment or if the private equity funds generate income from an active business, you may need to pay UBTI (Unrelated business taxable income).
It’s always best to discuss tax implications with a tax professional to ensure you are meeting your tax obligations.
Proven Success. Trusted Leadership. Real Impact.
At Horizon Trust, we make it simple to open and manage a Self-Directed IRA, so you can take control of your retirement on your terms. Founded by Greg Herlean, who has overseen more than $1.3 billion in real estate transactions, Horizon Trust was built by someone who understands what self-directed investors need: personalized service, fast transactions, and a custodian that stays out of your way.
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