Frequently Asked Questions
What benefits do Self Directed IRAs offer?
Self Directed IRAs allow companies to raise capital from retirement accounts, a largely untapped revenue source. Many investors have stagnant retirement accounts, and don’t know that they can be invested in privately held companies. You can increase assets under management significantly by offering your investors the Self Directed IRA option. Investment Sponsors find that Self Directed IRAs are the solution for existing investors who want to get more money into their funds, and prospective investors seeking an additional capital source for alternative investments. IRA investments tend to have a long term horizon and are less sensitive to short term fluctuations in NAV. Funds invested through the self-directed model have an extremely high retention rate, allowing for predictable cash flow and stability.
Are there any fees charged to capital raisers?
No. It is the IRA Accountholder’s responsibility to pay all fees associated with their Self Directed IRA.
If your company prefers to handle fees on behalf of your investors, then we can accommodate based upon your instructions.
What is the process to set-up a Self Directed IRA?
Your investor will complete the following 3 steps:
- Open– investor will complete an IRA Application online
- Fund– investor will transfer existing IRA or 401k funds into their new Madison account
- Invest– investor will instruct Madison to send a check or wire to your fund
How long does the process take?
The entire process (from opening an account to funding your investment) typically takes 3-4 weeks.
The majority of time is determined by the firm currently holding your investor’s retirement account. Some institutions are quicker than others in terms of responding to and executing rollover requests.
If your investor is transferring funds from an IRA, they can speed up the process by requesting a wire instead of a check. This will eliminate mail time and check clearing time, shortening the entire process to 2-3 weeks.
What documents does Madison Trust require from my company?
Madison Trust requires the Offering Documents and a Subscription Agreement for privately held investments.
Can Madison Trust refer investors to my fund?
Madison Trust Company is a “passive” IRA custodian and cannot recommend investments to its client base.
How do I educate my investors about getting retirement money into my fund?
Madison Trust Company provides the following free resources:
Madison Trust will mail a high-end, content-filled brochure to each of your investors, educating them about investing retirement money into privately held companies.
Madison Trust will deliver a comprehensive webinar to your investors, teaching them the ins and outs of investing IRA money into private placements like your company.
Madison Trust trainers will visit your office to train your employees about raising capital from retirement accounts. When onboarding new investors, your employees will now tap into IRA funds in addition to personal funds.
Madison will prepare a customized email blast for your audience, giving them the opportunity to open a Self Directed IRA and invest their IRA money into your fund.
Madison Trust will lecture at your events or meetings, explaining to investors how they can get more money into private placements via a Self Directed IRA.