Self-Directed IRAs: Investing in Private Companies While Keeping Your Tax Advantages
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Most investors are unaware that the money in an IRA can be used to invest in a private company—without penalty—while keeping its tax advantages. This kind of IRA investment can be structured as a loan or as an ownership stake. Whether you are an IRA account holder or a business looking for funding, join us for an eye-opening presentation that outlines the key concepts that set IRA funds free for investment in private companies.
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Self-Directed IRAs: Investing in Private Companies While Keeping Your Tax Advantages
- 1. Self-Directed IRAs P2Bi.com Self-Directed IRAs P2Bi.com Self Directed IRAs: Investing in Private Companies while Keeping your Tax Advantages Small Business Bootcamp Webinar Series Friday, September 25, 2015 with Clay Malcolm, New Direction IRA Moderated by Krista Morgan, P2Binvestor
- 2. Self-Directed IRAs P2Bi.com Presenter: Clay Malcolm, New Direction IRA NewDirectionIRA.com @NewDirectionIRA Moderator: Krista Morgan, CEO of P2Binvestor P2Bi.com @P2Binvestor 2 Introduction
- 3. Self-Directed IRAs P2Bi.com 3 New Direction does not provide investment advice or endorse any products. We are not the agent for any investment provider or investment. All information and materials are for educational purposes only. All parties are encouraged to consult with their attorneys, accountants and financial advisors before entering into any type of investment. Disclaimer
- 4. Self-Directed IRAs P2Bi.com • A descriptive term • Not a legal distinction 4 What is a self-directed IRA/HSA? Select a provider that allows the asset types in which you want to invest.
- 5. Self-Directed IRAs P2Bi.com 5 Tax-deferred/free plans eligible for self-direction Individual Accounts • Traditional • Roth • HSA – Health Savings Accounts Employer Accounts • SEP IRA: Simplified Employee Pension • Simple IRA – Savings Incentive Match Plan • 401(k) Plan
- 6. Self-Directed IRAs P2Bi.com 6 From IRS publication 590 Rollovers 1Qualified plans include, for example, profit-sharing, 401(k), money purchase, and defined benefit plans. 2Must include in income. 3Must have separate accounts. 4Must be an in-plan rollover. 5Any amounts distributed must be rolled over by direct trustee-to-trustee transfer to be excludable from income For more information regarding retirement plans and rollovers, visit Tax Information for Retirement Plans.
- 7. Self-Directed IRAs P2Bi.com • Transfer • Distribution / Rollover • Former Employer 401(k) Rollover • Annual IRA Contribution 7 Fund the account Old IRA or 401(k) Self- Directed IRA Options
- 8. Self-Directed IRAs P2Bi.com Contributions to IRA No immediate benefit for the IRA holder Take distributions from IRA You reach 59.5 years old IRA invests in assets 8
- 9. Self-Directed IRAs P2Bi.com Statutorily disallowed assets * Exception: U.S.-government-minted gold or silver eagle, gold and palladium bullion Life Insurance Collectibles 9 any work of art, any rug or antique, any stamp or coin*, any alcoholic beverage, or any other tangible personal property specified by the Secretary for purposes of this subsection.
- 10. Self-Directed IRAs P2Bi.com 10 Private Companies Real Estate Private Notes / Loans Precious Metals What is your expertise?
- 11. Self-Directed IRAs P2Bi.com Possible Assets
- 12. Self-Directed IRAs P2Bi.com 12 No transactions between you or other disqualified persons and your IRA. A personal benefit derived from your plan that does not come to you as a distribution is not permitted. No Self Dealing You & Disqualified persons Your IRA No self-dealing 12
- 13. Self-Directed IRAs P2Bi.com Granddaughter’s Spouse Brother Spouse IRA Holder Daughter In-Law Son Daughter Son In-Law Grandson’s Spouse Grandson Granddaughter Grandmother Grandfather Grandmother Grandfather MomDad Nephew UncleAuntUncle Cousin Sister Sister In-Law Niece Disqualified persons include:
- 14. Self-Directed IRAs P2Bi.com IRS Reg. Section 4975 – Prohibited Transactions Selling something you own to or buying from IRA Lending money, extending credit to IRA Providing services for IRA Personal use of plan assets Use of assets by fiduciary Getting “paid” by your IRA 14
- 15. Self-Directed IRAs P2Bi.com Private Placement Private Lending Private lending vs. private equity 15 1. Money goes to business, individual, or other investor. 2. Agreement in place for money to be repaid. 3. Equity or property may be used to secure the promise to repay 1. Money goes to start-up or established business. 2. Equity ownership in the business is given in exchange. Repayment comes via earnings or ultimate sale of the ownership. 3. Equity is usually represented in the form of shares of private stock.
- 16. Self-Directed IRAs P2Bi.com Lending Options • Secured by Collateral or Unsecured • Must be a real economic transaction • Originate a loan or buy existing note 16
- 17. Self-Directed IRAs P2Bi.com Lending Options Account holder tasks: • Find Borrower • Perform Due Diligence • Negotiate terms and generate note 17
- 18. Self-Directed IRAs P2Bi.com 1 5 Investment Timetable Open Self-Directed IRA 2 Business Days 2 3 Find Investment Varies Move Funds Into Account Estimate 1 to 4 weeks Assemble Investment Documents Varies Investment Documents to NDIRA 3 Business Days before Funding 4 18
- 19. Self-Directed IRAs P2Bi.com Case Study: Private Loan Using 19
- 20. Self-Directed IRAs P2Bi.com • Step 1: Open and fund self-directed account • Step 2: Direct funds to be sent toP2Bi • Step 3: Select companies at P2Bi 20 Case Study: Private Loan Using
- 21. Self-Directed IRAs P2Bi.com Your IRA makes the loan… …and gets all the returns. Your IRA 21
- 22. Self-Directed IRAs P2Bi.com New Direction IRA 1070 W. Century Dr. Suite 101 Louisville, CO 80027 877/742-1270 info@ndira.com www.NewDirectionIRA.com 22
- 23. Self-Directed IRAs P2Bi.com 23 Ask us anything! Please use the chat feature on the left of the screen to enter your questions. Moderator Krista Morgan @krismtl @p2binvestor hello@p2bi.com p2bi.com (720) 361-1500 Presenter Clay Malcolm @NewDirectionIRA cmalcolm@ndira.com NewDirectionIRA.com (303) 665-5926 x113
- 24. Self-Directed IRAs P2Bi.com Self-Directed IRAs P2Bi.com We are always interested in partnership opportunities, and we reward referrals. Thank you 899 Logan St Ste 210 Denver, CO 80203 720.361.1500 P2Bi.com | hello@p2bi.com facebook.com/p2binvestor @p2binvestor