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Tilden Moschetti: A great
opportunity for syndicators and

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fund sponsors is through self
directed individual retirement

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

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

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Moschetti. I'm a syndication
attorney with the Moschetti

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syndication Law Group, we
specialize in Regulation D Rule

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506b and 506c offerings.

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So what is a self directed
individual retirement account, a

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self directed individual
retirement account or self

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

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same with a an institution that
holds the money and makes

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decisions and basically protects
the investor from touching their

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

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

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

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

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step further, instead of the
administrator making the

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

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

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

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make the decision on where
exactly that money goes. And

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

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

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

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

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

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a administrator and that
administrators job is to make

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

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

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their beneficiary in the the the
money hitting their hands or

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something not proper happening
within the IRA rules that will

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

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happens when you put this
offering in front of your

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

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

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

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

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

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

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

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entered into an agreement, where
they become that beneficiary of

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that account, and the
administrator takes control,

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they then direct the
administrator to invest in your

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

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memorandum the operating
agreement, not only to the

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investor, but also to the
administrator, the administrator

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

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

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beneficiary from any of those
tax consequences, which would be

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disaster. Assuming that
everything is fine, they will

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then sign the subscription
agreement. Typically, it is that

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administrator that signs the
subscription agreement, but a

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lot of times they will also ask
the investor slash beneficiary

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

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administrator the authority to
then send the money and buy the

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

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

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

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

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

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

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way the taxes flow, that
obligation flows to the

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

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

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

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

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to the administrator for the
benefit of your investor, and

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never to the investor
themselves. If the investor has

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

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

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

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

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that it stays within the
administration of that self

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

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

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syndicators and for fund
sponsors, is because now not

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

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capital that's available in
these individual retirement

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

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

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opportunity to invest in your
offering, which would, which

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may, and hopefully will give
much better returns than

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

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

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powerful tool that is readily
available for syndicators to use

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and to help their investors make
good decisions and possibly make

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

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

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

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offering under Regulation D Rule
506b and 506c.