Using a Self-Directed IRA to Invest in Private Equity

You hear a lot about stocks and bonds in retirement planning. Maybe even real estate. But private equity? That’s a lesser-known path—and it’s one that’s gaining traction with investors who want to take more control over what they own and how they grow wealth for the long haul.

A Self-Directed IRA is a vehicle through which you can invest in private equity. And because these assets aren’t traded on public markets, they often come with different types of opportunities and risks. But for investors who know what they’re looking for, private equity inside a Self-Directed IRA can offer serious upside.

What Makes Private Equity So Appealing for Self-Directed IRAs?

Be honest. You may have thought the idea of private equity investing was strictly for high-net-worth individuals or institutional players. But a Self-Directed IRA opens the door for everyday investors who want access to non-public companies. You’re not buying shares through an app, for example. You’re working directly with a business, or investing through a private placement, and setting your terms in a more flexible environment.

One of the biggest reasons people choose private equity is the potential for higher returns. These are often long-term plays. You might be investing in a company before it hits its stride—when valuations are still relatively low. If the business grows or is eventually acquired, the payoff can be substantial.

Even better? Those returns stay inside your Self-Directed IRA. They can grow tax-deferred in a Traditional account. Or they might even grow tax-free in a Roth, if you meet the withdrawal criteria. And because private equity investments often operate independently of public markets, they can bring the critical elemeents of balance and diversification to a retirement portfolio.

What to Consider Before You Jump In

Even with the above said, private equity isn’t for everyone. It requires careful due diligence and patience to identify the right opportunities. And these investments are typically illiquid. You can’t sell your stake with the click of a button. You might be tied in for years before there’s a payout, and there’s always the risk that the company won’t perform as expected.

If you’re using a Self-Directed IRA, you also have to make sure the investment stays compliant. You can’t invest in a business you own personally, or one tied to a disqualified person like your spouse, parents, or children. And all transactions need to run through the IRA—meaning the shares are purchased by the account, not by you directly.

That’s why working with a Self-Directed IRA custodian who understands private equity is key. They’ll help you navigate the paperwork, hold the investment correctly, and keep the account in good standing with IRS rules.

Taking a Closer Look at Your Retirement Strategy

What makes private equity in a Self-Directed IRA so exciting is the combination of flexibility and opportunity. You’re not stuck with cookie-cutter portfolios or automated decisions. You can actively choose businesses you believe in—whether that’s a promising startup, a niche fund, or a company in your community you’ve followed for years.

And while it’s not a fit for every investor, it’s worth exploring if you’re looking to move beyond traditional options. The long-term growth potential, paired with the tax benefits of a Self-Directed IRA, makes private equity a compelling choice for those ready to take a more hands-on approach.

If you’d like help getting started or just want to understand the process better, we’re here to walk you through it. Call New Vision Trust Co. at 866-7500-IRA and we’ll help you explore how private equity could work in your retirement strategy.