Did You Know Private Equity Investments are Permissible in Your IRA?

Private equity investments are assets that many heavy hitters have in their investing arsenals. Think about Mitt Romney and Warren Buffet—two incredibly successful and sophisticated individuals who have obviously made quite a bit on these assets. And while, not everyone can invest at the levels those two do, private equity is available to others—and you can invest in them using funds from your self-directed IRA.

Most often, private equity options become available when a business is in need of capital for growth, restructure, product development, or expansion. Many investors seek to buy out private companies that are struggling in an effort to turn the company around before making investment options available to the publicA good looking blond man in a business suit looking out of the window of a highrise considering private equity investments for his IRA. or selling the business for profit. The idea is to strengthen the business and make it more than it was worth so the investors get a return. Doing so can take piles of money that is gained from numerous private investors willing to take risks that have the potential to be incredibly fruitful.

In these situations, the businesses do not have stock options available to the general public on the open market. The offerings are typically limited to accredited investors who have large net worths that can withstand a significant hit should the investment go south.

If you are an accredited investor, you can use your retirement funds to invest in private equity. Self-directed IRAs allow account owners to acquire many alternative investments such as these to grow tax-sheltered income for retirement. So, if you have knowledge and expertise in this realm—you may find these assets an attractive addition to your retirement portfolio.

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How do private equity investments work in a self-directed IRA?

When you invest in private options with retirement funds, your IRA will probably receive ownership in the form of stock. The stock is titled in the name of your retirement plan, not you personally. Dividends are paid when a profit is made, and that income flows directly into your self-directed account. Depending on the type of account you have, that income will either be tax-free or tax-deferred.

There are quite a number of IRA providers that do not allow private equity investments—but Advanta IRA does. As a leading self-directed IRA administrator, we allow our clients to invest in nearly every alternative asset permissible in self-directed plans in order to create diversity in their portfolios. Our clients are able to invest in what they know best, putting their own knowledge to work in growing income in their retirement plans.

If you have questions about this article and want to learn more about alternative investments in your self-directed IRA, call us at (800) 425-0653 or send us a message

About Scott Maurer

Scott Maurer, Vice President of Sales for Advanta IRA, is a recognized expert in the field of self-directed IRAs. With a law degree from the University of Florida and as a designated Certified IRA Services Professional (CISP), Scott’s keen understanding of rules and regulations fuels his passion to educate others on the power of investing in alternative assets using self-directed IRAs. Scott is a frequent guest on retirement and investing webinars and podcasts, and he has shown thousands of individuals how to achieve financial freedom by teaching them how to use their retirement funds to invest in private placements, real estate, private lending, and more. Throughout his two decades in the industry, he has watched numerous unique investments unfold, giving him great perspective of what is possible when people take control of their retirement funds and investing decisions.