Tilden Moschetti: A great
opportunity for syndicators and

fund sponsors is through self
directed individual retirement

accounts. In this video, we're
going to go through what those

are, and why it's a great
opportunity. My name is Tilden

Moschetti. I'm a syndication
attorney with the Moschetti

syndication Law Group, we
specialize in Regulation D Rule

506b and 506c offerings.

So what is a self directed
individual retirement account, a

self directed individual
retirement account or self

directed IRA is an account much
like a traditional IRA. It is

same with a an institution that
holds the money and makes

decisions and basically protects
the investor from touching their

money during that period when it
needs to be in the account so

that they have a tax consequence
that's very negative to them. So

they protect that it's in that
shield, I think everybody really

understands that piece of it.
But a self directed goes one

step further, instead of the
administrator making the

decisions and acting on trades
to buy into a public security or

into something that is well
known and most of the time still

a public security, a self
directed IRA, lets the investor

make the decision on where
exactly that money goes. And

that could be into something
like a private offering, that is

being done under Regulation D
Rule 506b and Rule 506c, so they

can choose to invest in there.
So the setup looks like this,

you as are the sponsor, and your
investor is also a beneficiary

of the self directed IRA. Now,
the self directed IRA is run by

a administrator and that
administrators job is to make

sure that the rules of the IRS
and the states are complied with

to make sure that there's no
consequences that happened to

their beneficiary in the the the
money hitting their hands or

something not proper happening
within the IRA rules that will

cause a tax consequence. So when
that is set up properly, what

happens when you put this
offering in front of your

investor, the investor goes and
opens up a self directed IRA

account with the administrator.
And it's helpful to kind of

direct them to a bunch of
different places. So typically,

I will refer to for three or
four different self directed IRA

companies, let them know that
they exist, have them choose,

you know what, and talk to them
and make a decision on if one of

these would be a good fit for
them. When they do, they've then

entered into an agreement, where
they become that beneficiary of

that account, and the
administrator takes control,

they then direct the
administrator to invest in your

account. At that point, then you
provide the private placement

memorandum the operating
agreement, not only to the

investor, but also to the
administrator, the administrator

reads those documents to make
sure that all of the that it is

set up in such a way that it
protects the investor slash

beneficiary from any of those
tax consequences, which would be

disaster. Assuming that
everything is fine, they will

then sign the subscription
agreement. Typically, it is that

administrator that signs the
subscription agreement, but a

lot of times they will also ask
the investor slash beneficiary

to sign it as well. And that
gives them that gives the

administrator the authority to
then send the money and buy the

security from you. So that's all
done. They've now invested in

the the in there and in your
accounts, you have the investor

listed not as investor name, but
you have that investor listed as

as self directed IRA name for
the benefit of investor name.

When it comes time to do taxes,
you will be issuing the k one to

the self directed IRA with a
copy to the investor. So that

way the taxes flow, that
obligation flows to the

administrator to make sure it's
dealt with in a way that's

proper and conforms to the rules
of having an IRA. Then when

you're making distributions, you
need to make sure along with the

the admin an illustrator that
all the money that's sent goes

to the administrator for the
benefit of your investor, and

never to the investor
themselves. If the investor has

control of the money, that's
when everything goes kaboom.

That's when there's major major
consequences, including imputed

income, or penalties of possibly
even their entire Ira world. We

want to make sure that the money
doesn't go into the hands there,

that it stays within the
administration of that self

directed IRA. So that's the the
way that the that it's all set

up. Now, the reason I say that
it's a great opportunity for

syndicators and for fund
sponsors, is because now not

only do you have a lot more
capital to work with all this

capital that's available in
these individual retirement

accounts. But it's also a great
opportunity to talk to investors

about the fact that these even
exist, and that they may have an

opportunity to invest in your
offering, which would, which

may, and hopefully will give
much better returns than

whatever they would choose in a
traditional IRA. So I hope that

helps open your eyes to the self
directed IRA world. It is a

powerful tool that is readily
available for syndicators to use

and to help their investors make
good decisions and possibly make

more money and a much more tax
sheltered way. So if I can help

you as a syndication attorney
with your offering, don't

hesitate to give us a call and
we can talk through your

offering under Regulation D Rule
506b and 506c.