How SDIRA Investing Can Make You an Entrepreneur

How a Self-directed IRA can make you an entrepreneur
Estimated reading time: 4 minutes(Last Updated On: April 12, 2022)

Many people often dream of breaking out of the traditional 9-5 world and becoming an entrepreneur. The thought of being your own boss and working on your own terms is enticing but trying to figure out how to do it can be overwhelming. Not only do you have to have an idea, a business plan, and a goal, you need the capital to get started.

Did you know there are $28 trillion dollars sitting in retirement accounts? Yes, trillion with a T! Those savings funds could be the answer for many hopeful entrepreneurs. Self-Directed IRA money can be used to do private loans, or those funds could be used to invest in your start-up or venture.

How Can I Use SDIRA Money to Fund my New Business?

Studies show that one million self-directed retirement accounts are investing into private companies. With all that money sitting in retirement accounts available to invest into private assets, it’s possible to fund your business with IRA funds… but how? The first thing you must understand is how a Self-Directed IRA is involved.

When investing with Self-Directed IRAs, the account holder can diversify beyond publicly traded assets, into opportunities like real estate investments, cryptocurrency, private loans, and private companies. For the investors who aren’t as active, they prefer to take a more passive approach and lend their money to startup businesses that need funding or invest in shares of small companies. Since Self-Directed IRAs offer great benefits like tax incentives and the ability to invest in familiar assets, these plans are becoming more and more popular with private investors that want more control and freedom.

Once you have found a Self-Directed IRA holder who wants to invest with you, the process is pretty simple. You will decide the details and terms of the investment together, then provide the IRA custodian with those details. At Quest, we require an internal form with information like funding amount, maturity date, who is taking the money, etc., along with a few supporting documents depending on what type of asset is being purchased. Once the custodian has all the details, they can send funds directly to you on behalf of the investor’s IRA. It’s that simple! Whenever you need to make payments or payouts, you pay back their IRA.

Finding SDIRA Money to Fund My Business

As an entrepreneur, you can tap in and utilize those Self-Directed IRA funds. The process to use those funds is simple but requires a little bit of work and networking. Since self-directed IRA custodians like Quest must remain very neutral, the custodian can never put the investor and the new business owner together. This is where it’s up to you to make connections and share that this possibility is out there. Many people don’t know they can use Self-Directed IRAs to fund private investments and new companies.

It’s important to be familiar with the basics of how Self-Directed IRAs work and how someone can use the account to invest with you. Understanding the general process will help you as you share the possibilities with those you network with. And when it comes to networking, it’s important to say active and take the opportunities to network with investors as often as possible. You never know which conversation might lead to something life changing for you and your business!

Other Tips to Remember When Using SDIRA Funds to Become an Entrepreneur

When using Self-Directed IRAs to become an entrepreneur, it’s important to remember that there are certain accounts you cannot do business with, including your own! Self-Directed IRA rules say that you can’t use your own IRA to fund a startup company that you own personally. It must be someone else, which is why it’s crucial to networking at local and online investing events.

One way to find potential Self-Directed IRA account holders is to visit events held by Self-Directed IRA custodians. It may seem obvious, but the most common place to find SDIRA funds is at an SDIRA event! At Quest, we host around 3 local events every week, providing many opportunities to find potential investors. There are always certifies IRA specialist available at the events, too, to help answer questions or be a resource for you. Always have the contact information for a Quest Trust IRA Specialist easily accessible in case you areq talking to those who may want more information that you can provide! If you ever have questions, you can always contact an IRA Specialist by scheduling a direct 1-on-1 consultation.

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