Using a Self-Directed IRA for Business Startup Funding

Investing in startups with Self-Directed IRAs provides an incredible opportunity for both parties involved. Self-Directed IRA account holders get a chance to diversify their investments in a way that is normally unavailable to them. They can invest a sensible percentage of their Self-Directed IRA in a business startup that has promising profit potential. The startup founder, meanwhile, benefits by being able to access a source of funding in an easy and professional manner.

How Does a Self-Directed IRA Business Startup Investment Work?

When an investor decides to diversify with a startup, the first step is to open a Self-Directed IRA. This is an easy process. The investor can apply online or contact Madison Trust and work with a friendly CISP-trained specialist for step-by-step assistance. After the initial account opening, funds are transferred to the new Self-Directed IRA. This can be accomplished via a rollover from an existing retirement account or a new deposit. Finally, the account holder instructs Madison Trust to send the desired amount to the investment of their choice. That's it! Now, the investor has a great startup as an asset in their retirement account.

Which Startups Can Benefit the Most?

A Self Directed IRA is a vehicle that can invest in almost any product, irrelevant of the product or services being offered. (The one limiting factor would be Prohibited Transactions.) However, that doesn’t mean it will always be a great fit for your company. Self Directed IRAs work best close to the midpoint of the funding process. They provide an excellent funding bridge once you have an interested base but have not yet grown enough to warrant VC involvement. It’s at this point that your investors are seeing the potential of the company and just need the right vehicle to place an investment. By being able to access a percentage of their retirement funds, they can more easily invest in your company and vision.

A Self-Directed IRA is a vehicle that can invest in almost any business, irrelevant of the product or services being offered. The one limiting factor would be prohibited transactions. However, that doesn't mean it will always be a great fit for your company. Self-Directed IRA business startup investments work best close to the midpoint of the funding process. They provide an excellent funding bridge once the business has an interested base, but has not yet grown enough to warrant venture capitalist involvement. It's at this point that investors are seeing the potential of the company and just need the right vehicle to make an investment. By being able to access a percentage of their retirement funds, they can more easily invest in a company and its vision.

What Can Investors Expect When Opening a Self Directed IRA?

The process is a simple one, and Madison Trust guides investors every step of the way. It usually takes about three weeks to set up a Self-Directed IRA, but expedited service is available for certain circumstances. From a fee perspective, Madison Trust offers one of the most economical fee schedules. Setup is a one-time charge of $50, and the quarterly maintenance fee is $100. Use our comparison calculator to see how that stands up to our competition.

Self Directed IRA Tools for Startups

If you're starting a business of your own, Madison Trust can help you, too. You can't use your own Self-Directed IRA to invest in your business, but we can give you the tools you need to offer turnkey investing services to your investors. To learn more about how we can help accommodate the needs of your startup, contact us today.

To learn more how Madison customizes its process to accommodate the specific needs of each startup, feel free to call (800) 721-4900.

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