Private Placements – Private Equity

Sophisticated Investors Flock to Private Equity Investments in IRAs

Private equity is a unique investment that can fit well in a self directed IRA. It is important to note that these types of closed investments are usually only open to Accredited Investors. Private equity can invest in a wide array of options including, closed business stock, venture capital, or a pooled investment vehicle like an LLC, LP, or hedge fund. Inside each company, they may be investing in real estate, private lending, or purchasing companies. Because of each deal’s complexity, it is essential to discuss these investments’ pros and cons with your financial or tax advisor.

Retirees Hiking with Family

Investing in Private Equity With a Self Directed Retirement Plan

A self directed retirement plan can invest in most private offerings. These offerings include private equity/private stock. When investing in private equity with a retirement account, the dividends and gains from investments are paid directly to the retirement account. These dividends are either tax-deferred (Traditional IRAs) or tax-free (Roth IRAs). There can be capital calls with these types of investments, so please understand the investment and how it affects your IRA.

Investing in private equity within an IRA has been an option since 1974. However, the vast majority of investors are not aware of this option. This unawareness is due to traditional retirement account custodians limiting investments to Wall Street stocks, bonds, and mutual funds. Midland allows investors to choose alternative assets such as real estate and private equity investments to build their wealth.

Who Can Invest in Private Equity With a Self Directed IRA?

Typically, these alternative assets are limited to accredited and institutional investors. Accredited investors are those proven to be financially fit to invest large amounts of funds over a long time without sustaining a substantial hardship if the asset is fruitless. These funds may include investing in startup businesses, developing technology, gaining capital to improve an existing entity’s viability, and even acquiring an existing business.

Accredited investors can use their self directed IRAs and other retirement plans to invest in a private stock. This strategy allows investors to build tax-sheltered income in their accounts. Midland works closely with clients investing in private equity to facilitate the purchase in compliance with current rules and regulations. Our ability to do this maintains the account’s tax-advantaged status. It enables our clients the precious time to identify holdings they believe will increase their potential for building retirement wealth.

Learn about the SEC’s new accredited investor status.

If you’re looking to take advantage of investing in private equity using funds from your IRA, call our team of IRA specialists today!

View a case study in which a Midland client invested in private bank stock. Get an idea of what you can accomplish in your retirement account with private placements.

Easy Investment Process for Investors of Private Equity

    Open a Midland Account

    Next, open a self-directed IRA account with Midland. Choose from Traditional, Roth, SEP, or Simple IRA.

    Fund the Account

    Fund your account by transferring an existing IRA or rolling funds over from an existing retirement account.

    Identify and Investment - Private Placement

    First, identify an opportunity in which you would like to invest. Midland must determine if the investment is administratively feasible and to ensure proper custody.

    Direct the Investment - Private Placement

    After your account is funded, you will direct Midland to send the funds directly from your account to purchase the investment.

    Asset Review Process

    Your Midland account is now the subscriber/investor. All offering and investment documents will be titled to the account and gains will be paid to your account.

Private Equity FAQs

Why do I need to use Midland or another custodian?

Are there entities not allowed in an IRA?

Does Midland endorse private offerings?

How are the IRA investments titled?

How can my account be used to invest in a private business?

What is Midland’s/Custodian’s role after funding the investment?

What should I watch out for?