How do you use a self-directed IRA, self-directed 401(k) or other self-directed account to invest in a private company? John Bowens, Equity Trust’s Director, Head of Education and Investor Success at Equity Trust Company, breaks it down in this video.

Whether it’s a Limited Partnership interest, membership interest in an LLC, a SAFE Agreement, or owning shares in a privately held corporation, it’s possible to use a retirement account to invest, and John explains the steps.

Start a conversation with an IRA Counselor to learn more:

0:00 Intro 
0:54 Three step process to execute a transaction 
1:17 Step 1: Open and fund a SDIRA 
2:28 Step 2: Direct the investment 
5:06 Step 3: Manage and monitor your investment
6:16 Need assistance? How to schedule a one-on-one with consultation? 

Equity Trust Company is a directed custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional….(read more)

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Investing in privately held companies with a Self-Directed IRA can be a lucrative and rewarding way to grow your retirement savings. While traditional IRAs typically limit investments to publicly traded securities like stocks and bonds, a Self-Directed IRA allows you to invest in a much wider range of assets, including privately held companies.

Investing in privately held companies can offer significant financial benefits, such as the potential for higher returns and the opportunity to invest in innovative or niche industries that may not be available in the public market. Additionally, investing in privately held companies can also provide the satisfaction of supporting small businesses and entrepreneurs as they grow and succeed.

One of the key advantages of using a Self-Directed IRA to invest in privately held companies is the potential for tax-deferred growth. Any gains from your investments will grow tax-free within your IRA until you withdraw the funds in retirement. This can be a significant advantage, particularly if your investments experience substantial growth over time.

Furthermore, investing in privately held companies can also provide diversification to your retirement portfolio. By including alternative investments like private equity in your IRA, you can reduce your exposure to the ups and downs of the stock market and potentially enhance your overall portfolio performance.

To invest in privately held companies with a Self-Directed IRA, you will need to work with a custodian that specializes in alternative investments. The custodian will help facilitate the purchase of shares in the company on behalf of your IRA and ensure that all transactions comply with IRS regulations.

Before making any investments, it’s important to thoroughly research and evaluate the potential risks and rewards of investing in privately held companies. Since these companies are not subject to the same level of regulatory oversight as public companies, they can pose higher risks. It’s important to carefully vet the companies you are considering investing in and seek guidance from financial professionals if needed.

In conclusion, investing in privately held companies with a Self-Directed IRA can be a smart way to diversify your retirement portfolio and potentially boost your returns. With the right research and guidance, this type of investment can help you achieve your long-term financial goals while supporting the growth of small businesses and entrepreneurs.