by Kaaren Hall, CEO, uDirect IRA Services

In this article I’m going to discuss a few reasons why Sections 138312 and 138314 of the House reconciliation bill (released September 13th) threatens the investment choices of an approximate 3 million Self-Directed IRA investors in America. It’s time to tell your Congressional Representatives, “Hands Off My IRA”!

Firstly, the proposal could make it so that you could no longer purchase private placement equity or use the IRA-Owned LLC.  Secondly, what’s worse is that the proposal offers no “grandfather clause” and says you would have to remove those existing assets from your IRA by 2023. As a result, the implications are wide-reaching and would cause a lot of damage to IRA savers who may be forced to pay taxes on the value of those assets. Thirdly, it could wreak havoc on asset sponsors who could be forced to look for new sources of capital.

Specifically, the proposal addresses:

  • Private Placements (e.g. hedge funds, real estate funds, private equity funds, etc.)
  • Checkbook Control IRA LLCs and Trusts
  • Minority interests in LLCs that are 10% owned by the IRA or account-holder
  • Investments requiring the IRA owner to be an accredited investor

Steven Rosenthal, senior fellow at the Tax Policy Center, is quoted in MarketWatch, saying that non-public investments do not belong in retirement accounts. In his view, it’s a matter of fairness, tax compliance and investor protection when it comes to retirement tax rules that for too long, have already favored rich households.

What Rosenthal fails to see is how the proposal would impact Self-Directed IRA investors’ choices and prevent them from providing access to working capital for businesses.  This then deters job creation.

Self-Directed IRA investors as a group hold some $118 Billion is retirement assets.  These assets are crucial to our economy because these assets are to be used for expenses in retirement.   The proposal could decimate the nest egg of many middle-class savers.  Removing the choice to invest in certain assets removes the ability for many to access the same start-up opportunities offered to the uber rich.

What Can You Do To Stop This?

Make your voice heard. Contact your elected officials in the United States House of Representatives and Senate. Tell your story. Self-directed IRA investors have a significant voice as a group of approximately 3 million Americans and you deserve to be heard. Let your Representatives and Senators know how this proposal could impact you personally.

Not sure how to contact your U.S. Congressional Representative?

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What This Proposal Does Not Affect

  • Brick & Mortar Real Estate
  • Raw Land
  • Precious Metals
  • Lending from IRAs
  • Mobile Home Parks
  • Investing in performing and non-performing debt

When Could This Take Effect?

Congress seems eager to have this and other matters resolved before the session adjourns December 10th.

Take action now. Call, write, email or visit the offices of your representatives in the House and Senate. Hands off my IRA!