Jump to content

Recommended Posts

An IRA Owner would like to direct investment into a newly forming privately held US Business, whereby he would have an equity interest of less than 10% (probably less than 5%).

It should be noted the IRA Owner would be a member of the advisory board as a recognized professional with immeasurable experience and knowledge as it relates the product the company is developing and will ultimately be marketing.

Would this be a Prohibited Transaction? If the IRA Owner is not a member of the advisory board would the answer change?

Would being a member of the advisory board raise self dealing issues?

The business is developing and ultimately will market an implantable prosthetic.

Would this trigger Unrelated Business Income issues?

The company is expected to be quite successful and the IRA Owner would like the investment growth to occur in his tax deferred IRA rather than his personal asset portfolio for tax reasons.

Could this person who has a non-Title I DBP make the same investment using the DBP assets?

The issue of liquidity is understood. The need for annual valuation of the privately held investment for plan valuation purposes is also recognized.

Thank you

Link to comment
Share on other sites

I am making the assumption that his equity interest will be only the equity interest held in the IRA or DBP (i.e., not up to 10% held personally and then some more in the IRA or DBP).

Will he be compensated for his service as an Advisory Board member?

Is he a lender to the company (or involved with or related to any entity that is a lender)?

Does he have any other connections to the company (e.g., such as a relative involved with the company)?

If all the answers to these questions are "no" I don't see any PT issues.

Too many facts necessary to comment on UBIT, but if it's a great growth-oriented investment it's probably still a great growth-oriented investment even if some UBIT is thrown off along the way.

Link to comment
Share on other sites

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...