I recently did a Webinar with the CEO of Realty Mogul, an online Real Estate Crowd Funding Portal. To view this webinar click here or email us at [email protected] with your request.

Accredited Investor Self Directed IRAOne of the Webinar participants asked about accredited investor rules. He specifically wanted to know if he needs to be an accredited investor in order to take advantage of pooled investments in Private Placements within his self-directed IRA.

Each Private Placement is unique. If you are interested in a Private Placement, whether it is a fund, a non-traded REIT, oil and gas JV or any others outside the box of traditional investments, you need to find out what requirements the Product Provider has.

If what you are looking to invest in has an accredited investor requirement, then you as an investor need to meet that requirement. If you do not, then your IRA cannot invest in the asset. Just being in an IRA, which you may feel is separate from any personal investments, does not allow an investment to be made in a fund, portal, or any type of Private Placement.

All of this is to protect the investor from losing money that he cannot afford to lose.

What is the definition of an accredited investor?

Accredited Investors must meet one of the following conditions:

  • A person whose individual net worth at the time of the purchase of the asset exceeds $1 million excluding his personal residence.
  • A person who has had individual income in excess of $200,000 in each of the two most recent years or, if married, joint income of $300,000 in each of those years. There also must be a reasonable expectation of continuing to reach those same income levels.

For an entity such as an IRA or SEP (Self Employed Person), all beneficial owners must meet these same standards. In other words if you do not qualify personally, your IRA will not qualify either.

Many of us assume that because we are sophisticated investors we are accredited. That is not the case. Sophisticated Investors are ones that have the experience and the education to make informed investment decisions on their own behalf. This has nothing to do with being an Accredited Investor.

Become an informed IRA Investor. If you have questions regarding your individual qualifications, seek advice from a financial professional. If you have a question regarding whether an opportunity can be acquired with your Self-Directed IRA, visit us at www.irainnovations.com. We will be happy to assist and let you know if that particular investment is allowable in an IRA.