Private Equity

Holding Private Equity Investments in a Self-Directed IRA

Investors often choose to hold private equity investments in a self-directed IRA for the tax-advantages afforded by IRAs regarding any potential returns.

What Is Private Equity?

Private equity, sometimes offered through a private placement, consists of ownership interest in companies that are not publicly traded on a stock exchange. These investments can be made in an operating business, a real estate venture, or an investment partnership, among others.

Perhaps the best-known form of private equity investing is buying a stake in young, growing companies. Many of them turn initially to individuals, or “angel” investors, for funding to add people, equipment, technology, expertise, and marketing.

How Can I Invest in Private Equity With My IRA?

There are two primary ways your self-directed IRA can invest in Private Equity:

1. Through a pooled investment vehicle or fund. This may include Private Equity funds, Venture Capital (VC) funds, and funds of funds.
2. Directly in a company. This means putting money into private companies, and receiving an equity interest (e.g., common or preferred shares or other form of equity ownership interest).

You can use your Pacific Premier Trust self-directed IRA to purchase ownership in everything from micro-businesses to billion-dollar global companies — as well as less conventional opportunities, such as land trusts. Some of the types of private equity investment Pacific Premier is able to hold as custodian include:

• Limited Liability Companies (LLC) and Limited Partnerships (LP)
• Private common stock, preferred stock, options, rights, and warrants
• Private hedge funds
• Funds of funds
• Private and non-exchange traded Real Estate Investment Trusts (REITs)
• Convertible notes

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Note: Pacific Premier Trust performs the duties of an independent retirement custodian, and, as such, does not provide investment advice, sell investments, or offer any tax or legal advice. Pacific Premier Trust is not affiliated with any investment, investment sponsor or investment advisor. Potential clients are advised to perform their own due diligence in choosing an attorney, tax advisor, or any investment opportunity. Alternative investments are not FDIC insured and are subject to risk, including loss of principal. This information is for general purposes only and is not intended as an individual recommendation or to be a substitute for specific individualized tax, legal, or investment planning advice.