Question 1

What is private equity investing inside a Self-Directed IRA?

Accepted Answer

Private equity investing uses IRA funds to buy equity in privately held companies, funds, or partnerships. Inside a Self-Directed IRA you can access startups, private operating companies, venture funds, and other non-public opportunities while keeping returns tax-deferred (Traditional) or tax-free (Roth).

Question 2

What is private lending and how can my IRA participate?

Accepted Answer

Private lending is providing loans (secured or unsecured) to individuals, real estate investors, or businesses in exchange for interest. Your Self-Directed IRA can originate or purchase promissory notes and secured loans—receiving interest directly into the IRA—provided all documentation, titling, and servicing are handled by third parties and IRS rules are followed.

Question 3

Can I use my IRA to invest in San Diego startups or lend to San Diego borrowers?

Accepted Answer

Yes. A Self-Directed IRA can invest in San Diego private companies or make loans to local borrowers, as long as transactions are arm's-length, documented, and the IRA—not you personally—owns the investment or note.

Question 4

Are there special IRS rules or prohibited transactions I should know about?

Accepted Answer

Yes. Prohibited transactions include self-dealing (lending to yourself or certain family members), personal guarantees by the IRA owner, and providing personal services to IRA-owned businesses. All income and expenses must flow through the IRA account to maintain tax-advantaged status.

Question 5

What types of documentation are required for private lending through an IRA?

Accepted Answer

Typical documents include a signed promissory note, security agreements or mortgages (if secured), borrower credit and collateral evidence, escrow/title documents (for real estate secured loans), and servicer agreements. The IRA custodian should be named as the investor on loan paperwork.

Question 6

How are interest and principal payments handled for IRA loans?

Accepted Answer

All interest and principal payments must be paid directly to the IRA’s account. The IRA (not the account holder personally) must receive loan repayments and must pay any loan-related expenses from IRA funds.

Question 7

What are the risks of private equity and private lending in an IRA?

Accepted Answer

Risks include illiquidity, business failure, borrower default, valuation uncertainty, and potential unrelated business taxable income (UBTI/UBIT) in certain leveraged structures. Proper due diligence, diversification, and custodial oversight help manage risks.

Question 8

Can my IRA use leverage when making private investments or loans?

Accepted Answer

Leverage is sometimes permitted, but if an IRA uses debt (other than non-recourse loans for real estate), the investment may generate UBIT/UBTI and increase compliance complexity. Always consult your custodian and tax advisor before using leverage.

Question 9

What fees should I expect when using Independent IRA for private equity or lending transactions?

Accepted Answer

Fees vary by transaction and may include account setup fees, transaction or funding fees, annual custodial fees, document fee, and third-party costs (title, escrow, legal). Independent IRA provides transparent, itemized fee schedules for each deal type.

Question 10

How do I source private equity deals or lending opportunities in San Diego?

Accepted Answer

Opportunities can be sourced through local venture networks, angel groups, real estate brokers, private lending platforms, business brokers, and direct relationships. Independent IRA can help with deal documentation and custodial processing but does not provide investment advisory or specific deal sourcing as fiduciary advice unless contracted to do so.

Question 11

How do I get started investing in private equity or private lending with Independent IRA?

Accepted Answer

Open a Self-Directed IRA (Traditional or Roth) with Independent IRA, fund the account via transfer/rollover or contribution, identify the target investment, provide required documentation to the custodian, and authorize funding. Independent IRA will assist with titling, funding, and compliance steps.

Question 12

Are returns from private equity and private lending taxed inside the IRA?

Accepted Answer

Returns typically remain tax-deferred inside a Traditional IRA and tax-free inside a Roth IRA. However, certain leveraged investments may trigger UBIT/UBTI taxes. Consult your tax advisor to understand tax implications based on the investment structure.

Private Equity & Private Lending Solutions in San Diego

What Is Private Equity Investing?

Private Lending in San Diego

Why Use a Self-Directed IRA for Private Equity & Private Lending?

Private Equity Investing in San Diego

Private Lending Opportunities in San Diego

IRS Rules for Private Equity & Private Lending IRAs

Prohibited Transactions:

How Private Equity & Private Lending IRA Investing Works

Why San Diego Investors Choose Independent IRA

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