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SDIRA Concepts

Investing in Private Entities with an IRA: How it Works

July 28, 2020

Step 2: Equity Trust Processes Your Investment Direction and Remits Money as Directed

  • Your Equity Trust account now owns the investment
  • Send original supporting documentation to Equity Trust for safekeeping

Step 3: Manage the Investment with Your IRA

  • You must remain at arm’s length from your IRA investment at all times and avoid prohibited transactions
  • Consult with your tax attorney or financial professional or reference IRS Publication 590

What’s next?

The final step is acting on your exit strategy.

Some examples of exit strategies could be selling the investment, taking a distribution, or passing the account to a beneficiary.

Watch this video for more on how Private Entity Investing Works in a Self-Directed IRA:

Yes. Investments in newly formed private entities, such as limited partnerships, limited liability companies, C corporations or land trusts, are permissible under the Internal Revenue Code, with the exceptions of subchapter S corporations.

No. IRAs are not qualified as investors in subchapter S corporations.


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