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business10h ago
Investing in alts through a self-directed IRA? Read this first
- Self-directed IRAs offer tax benefits but carry major caveats and the risk of costly mistakes.
- Prohibited transactions and self-dealing rules require careful evaluation of asset choices and custodial actions.
- Custodians mainly hold assets and do not assess investment quality, raising the need for professional guidance.
- Investors may face penalties if they engage in prohibited transactions or fail to obtain annual valuations.
- The article cautions about excess liquidity use and potential tax results when liquidating improper holdings.
- Loss harvesting rules do not apply to private equity funds within self-directed IRAs, reducing deductions.
- Unrelated business income taxes can arise from operating businesses funded within the IRA.
- IRS rules limit holding life insurance, collectibles, and related-party loans in self-directed IRAs.
- Investors should seek professional advice to navigate custodial arrangements and avoid disqualifications.
- The article highlights Peter Thiel as a case often discussed in the context of self-directed IRAs.
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