Wednesday, September 26, 2012

Fund Your Company With a Self-Directed IRA

Please note: You can fund your company with a self-directed IRA but you cannot do it directly. As per IRS rules, you CANNOT use your IRA to directly purchase stock in a private company you own the majority or controlling stake in.

According to Wikipedia, “If the account owner or beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year in which the transaction occurred." Hence, you want to make sure that you follow all the rules in setting up then transferring out the proceeds.


What you have to do is set up a legal entity in your name as trustee of your IRA. As the trustee, you can then invest the funds into your company. It's similar to the way your IRA Rollover account is set up and then works when you rollover your 401K. It’s a bit circuitous, yes, but it is completely legal.

Read the rest of the article at Use a Self-Directed IRA to Fund Your Company.

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