How can an Entrepreneur Benefit from a Self-Directed IRA?
Being an entrepreneur has its challenges and it also has its rewards. It was in September that Richard first came up with the idea for his company, a tech start-up with huge potential. Like all ground-level entrepreneurs he needed funding and raising seed capital was not something he learned at Berkeley. Necessity being paramount he adapted and reached out to family and friends. It was from this group he learned that an IRA could fund his business.
As long as Richard stayed away from investors who are “disqualified” to his IRA (Individual Retirement Account) he could raise capital from this source:
- your spouse
- your parents and/or your adoptive parents
- your natural grandparents
- your natural children and/or your adopted children
- your stepchildren
- The spouse of your natural children
- your grandchildren
- Any fiduciary
- Any people providing services to your IRA
By March his business had the capital it needed to go to the next level. Right now there is something like $9.2 Trillion in IRAs in America. Only about 3% of those funds are invested in alternative assets. Some of the IRA Investment Options include real estate, private stock, notes, precious metals and more.
For our entrepreneur Richard, his company flowed back a portion of the profits back to these IRA accounts. It was a win-win. Whether raising seed capital or funding expansion, IRAs can be a source of capital.
It’s not unusual for people to think Self-Directed IRAs are something new. Actually they were created when ERISA was enacted by then president Gerald Ford in 1975. IRAs have always been able to hold any asset except life insurance and collectibles. A Self-Directed IRA is just like a typical IRA with the only exception being the asset class they hold.
Now well into his third year, Richard’s company is humming along in no small part due to the creative thinking of his investors who had already established Self-Directed IRA accounts.