Can I invest or loan money to the company I currently work at?

If you and your disqualified owners are below 50% in ownership combined, yes! However, be very careful to avoid conflicts of interests and prohibited and self-dealing transactions.

What should I keep in mind?

  • All stock certificates and ownership of the company LLC or limited partnership should be in the name of the IRA.
  • You must invest in new shares, and must not buy old shares from yourself or a disqualified person.
  • An IRA cannot buy shares of a company that is owned 50% or more by a disqualified person.
  • You have to be very careful of self-dealing transactions when a disqualified person owns a significant portion of the company, or if that person is a key employee.
  • There should be no expected or connected "quid pro quo" for you investing in a company related to a disqualified person. Your salary, position, involvement, or professional relationship should not improve or be expected to change as a way to compensate you for your investment.
  • You can invest in a business that does not pay taxes, but you might have to pay UBIT or some taxes to retain full tax advantage status within your IRA.

What about loaning money?

  • You must make loans at fair market rates, similar to those that a bank might provide your business.
  • Your loan must not change or be considered when evaluating compensation, as you cannot be paid personally for business done through your IRA
  • You can read more in our article about promissory notes.

What if I'm investing in a hedge fund I'm associated with?

There are specific considerations that must be adhered to. Please schedule a meeting with a member of our Sales team.