Using a Self-directed IRA to Invest in Startups and Early-Stage Companies: Become an angel investor or private equity investor with funds from a tax-advantaged retirement account

Entrepreneurs who are starting up a business often have tremendous vision but may be short on start-up or growth funding for their private enterprises. That’s where private equity (PE) investing comes in.

What is private equity investing?
Private equity is an alternative asset allowed in a self-directed IRA (SDIRA). There are two categories of private equity investors:

• An angel investor is an individual who gets involved financially in the true startup, pre-revenue stage, providing seed money, usually for future equity in the business—if the company is successful. Angel investors look for companies with high growth potential, often in emerging industries or those that could be market disruptors. Their investment goal is to support the company’s growth. The investor’s IRA makes money when the company goes public, is acquired, or is sold (at a profit).
• Private equity investors and PE firms invest in companies that span from early-stage to more mature after the business has become established and has some cash flow. They are investing to help the company improve performance, make strategic changes, enter new markets, and more. The PE investor’s IRA makes money when the ownership stake is sold at a higher valuation than the initial investment.

Types of startups that seek angel and private equity investment

Companies that seek and attract PE investments are often in the technology realm, encompassing various sectors and types—cloud computing, AI, social media, technology in the financial, educational, real estate and healthcare sectors, energy, e-commerce, biotechnology, and cybersecurity. Examples of companies that are now household names but got their start with angel investments include Zoom, Stripe, Robinhood, Coursera, Open Door, and Rivian (electric vehicles).

The companies receiving the investment are privately held and are not listed on a public exchange.

Ways to make private equity investments

Note that some offerings for private equity funding may be restricted to accredited investors. However, in addition to straight equity (a direct ownership investment in which the IRA becomes a shareholder) there are various vehicles an account owner can use to make private equity investments using a SDIRA:

• Limited liability company
• Limited partnership – an investment in a private equity fund
• Real estate syndication, which we explain in this article
• Debenture – essentially a loan, this is a long-term, unsecured debt instrument issued by a company to raise capital
• Convertible notes – a debt instrument in which the investor’s investment plus any accrued interest is converted into shares of company stock
• Private hedge fund
• Private equity crowdfunding – online platforms that connect investors with private companies or investment funds seeking capital (enabling both accredited and non-accredited investors to participate)

Private equity funding through a self-directed IRA

As with most alternative assets, PE investment is more long term and illiquid but carries potential for strong returns—and the investment grows in a tax-advantaged retirement account. These investments diversify retirement portfolios and enable investors to align investments held in their SDIRA with personal values or interests (supporting local startups, innovative products, or companies with social justice missions, for example).

Like all self-directed investments, account owners are strongly encouraged to conduct their due diligence and understand the risks and potential benefits of the investment before sending investment instructions to the SDIRA account administrator. This may entail researching the startup business, its market potential, business plan, revenue model and financial statements and projections; legal documents; and in the case of investing in a fund or syndication, researching that entity as well.

Remember that the self-directed IRA is the investor, so the investment is made in the name of your SDIRA to comply with IRS regulations. Investors are also advised to avoid making a prohibited transaction by investing in a startup in which you personally (or certain family members) have significant ownership or control interest. Any income or fees related to the asset flow through the SDIRA.

Work with a trusted administrator and custodian

At Next Generation Trust Company, our clients invest in a broad array of alternative assets, including private equity funding. We serve our clients as both the administrator of self-directed retirement plans and custodian for the assets held within their accounts. We also provide client education about various aspects of self-directed IRAs and the many nontraditional investments they allow. You can sign up for an event, watch our webinars, download our white papers, or contact our helpful team with your questions at NewAccounts@NextGenerationTrust.com or 888.857.8058

Americans are Living Longer. Will Their Retirement Savings Stand Up to Greater Longevity?

Among the calculations for retirement savings is longevity. Consider these numbers:

• In 1900, the average lifespan of men was only 46.3 and women 48.3.
• By 1946—the year in which today’s baby boomers began being born—lifespans had increased considerably: 64.4 for men and 69.4 for women.
• Forty years ago in 1985, men were reaching just over 71 years old and women a little over 78 years old.
• In 2023, the lifespan for men was 75.8 and 81.1 for women.
• The average U.S. life expectancy (across genders) for 2025 is 79.4 years

Given that the normal retirement age was 65 for decades (now 67 for those born in 1960 and later), this meant that generations ago, many people did not enjoy as many (or any) years of retirement as they do today. However, it is no longer unusual for people to live into their 90s or to reach centenarian status. Therefore, taxpayers who prepare for longevity in their retirement plan—and plan for several decades, not years, for their retirement savings to support them and their retirement goals—will have built in greater retirement security.

Women, take note: Although the gender gap is closing somewhat, the average life expectancy for women has been and continues to be longer than for men. So plan accordingly!.

Longevity literacy affects retirement savings

The TIAA Institute released a report in April (with the Global Financial Literacy Excellence Center) about workers’ expectations about longevity and retirement. In general, it found that people’s “longevity literacy” among American adults was poor.

From the report: “Given expectations about lifespan and retirement age, an estimated 20% of U.S. workers anticipate a retirement of at least 30 years, and one-half expect to be retired for 20 years or more. Only 15% expect fewer than 10 years of retirement.”

These expectations influence decision-making about working, saving, and lifestyle in later years.

Another study from Nationwide Retirement Institute and the American College of Financial Services revealed that less than half the respondents (48%) factored longevity into their savings and investment choices. However, most respondents also said they would make lifestyle and financial changes if they knew their lifespan would be longer.

According to the study, living just five years longer than planned for in the average American’s retirement savings increases the risk of running out of money by 41%; this percentage skyrockets to as high as 300% when factoring in lower near-term returns on investments.

In short, expectations about lifespan affect one’s retirement readiness and security. And advance planning for a long life and the costs to maintain one’s lifestyle (and health) means making sure you don’t outlive your savings.

This is especially true today, given the economic uncertainty and market volatility we’ve been experiencing this year. Baby boomers and Gen Xers have also lived through wild cycles following 9/11 and the Great Recession; for many people whose retirement portfolios were tied to stocks and bonds, recovery took a lot of patience, persistence, and fortitude.

While younger taxpayers had a longer time horizon to bolster their retirement savings during those downturns (as well as the pandemic’s effects on the economy), many retirees and near-retirees were worried about having to work longer or go back to work to save more for their later years—which could stretch through their 80s into their 90s or age 100.

Alternative assets can temper the effects of market volatility

Taxpayers with self-directed IRAs understand the value of long-term nontraditional investments that are not correlated with market performance—and that help build a more diverse retirement portfolio. The many alternative assets allowed in these tax-advantaged retirement plans are generally more illiquid and long term (such as real estate, private equity funding, commodities, precious metals, and royalties), and enable savvy investors to fill their mid-to-long-term allocation buckets with assets they already know and understand.

At Next Generation, our starter kits make it easy to open a new self-directed IRA (or solo K, HSA, or Coverdell ESA) and build retirement wealth with a broad array of alternative assets. And, thanks to our strategic partnership with iTrustCapital, our active clients can further diversify their portfolios when they open a sub-investment account to buy and sell cryptocurrency on iTrustCapital’s secure platform.

Looking for more insights into self-direction as a retirement wealth-building strategy? Feel free to view our webinars and sign up for our newsletter to receive news and updates about the many options available to investors with self-directed IRAs.

Next Generation Trust Company Partners with iTrustCapital, a Cryptocurrency Investment Platform to Provide Streamlined, Secure Access

ROSELAND, NJ, June 06, 2025 /24-7PressRelease/ –  Founder and CEO of Next Generation Trust Company, Jaime Raskulinecz, has announced that her firm has formed a strategic partnership with iTrustCapital, a leading FinTech software platform for alternative assets. Through this partnership, Next Generation clients have the ability to open an account at iTrustCapital for buying, selling, and storing cryptocurrency, one of the many alternative assets allowed in self-directed retirement plans. Now, investors with active accounts at Next Generation will be able to buy and sell popular cryptocurrencies such as Bitcoin, Ethereum, XRP and Solana 24/7.

“This opportunity enables our clients to invest in crypto directly and safely via the iTrustCapital platform. In addition to the independence that self-directed investors value when it comes to their investments, they are also assured their assets are well protected by a secure, regulated and transparent partner,” said Raskulinecz.

Read the full press release here: https://www.24-7pressrelease.com/press-release/523556/next-generation-trust-company-partners-with-itrustcapital-a-cryptocurrency-investment-platform-to-provide-streamlined-secure-access

Cryptocurrency as an Investment—and a Retirement Portfolio Asset

Bitcoin (BTC) and other cryptocurrencies are a decentralized peer-to-peer electronic currency that can be sent between parties without intermediaries (banks and other financial institutions). The currency is “mined” on vast computer networks and transactions are secured with cryptographic signatures that protect users’ wallets where the currency is stored.

The first block of Bitcoin was mined in January 2009. Other “alt coins” have followed, such as Ethereum. When cryptocurrency burst onto the financial scene, people struggled to understand what BTC and other digital currencies were and how they worked—not to mention blockchain, the technology that records crypto transactions in a shared public digital ledger.

While there is a lot of wonky information to digest around Bitcoin and other cryptocurrencies, suffice to say it has become more popular as an alternative asset among investors; that’s because in addition to being used to pay for everyday goods and services, it can also be traded at, one hopes, a profit as its value fluctuates.

Investing in Bitcoin and other crypto

Although Bitcoin and the crypto market in general have seen some turbulence in the past few years, Binance Research reported this month that the OG of cryptocurrencies has regained its dominant position with a four-year high of 63% as the cryptocurrency market cap rose by 9.9% in April. As an asset class, crypto’s combined market capitalization (all coins) of almost $3T at the end of April.

Bitcoin’s price is volatile, but the asset has gained popularity and is going more mainstream today. It has gained acceptance through exchange traded funds (ETFs) and other traditional channels for investors, as well as the current administration’s acceptance of the asset, with some relaxation of the regulations designed to protect investors against fraud and money laundering schemes.

Anyone with valid ID and bank account can invest in crypto in several ways. These are the most common:
• Buy the coins directly via a cryptocurrency exchange platform
• Online exchanges make it easy to buy and sell the asset; some are regulated while others offer less protection but greater access to new coins.
• Invest in crypto-related companies or funds such as a blockchain ETF (that comprises multiple companies)
• Become a crypto miner, which typically requires investing in mining software and hardware
• Include crypto investments in a self-directed IRA that is managed by a custodian that accepts the digital currency and/or partners with a platform for those transactions

Investor beware

Cryptocurrency is still becoming more accepted and understood, and as noted above, the crypto market is volatile. As with other alternative assets allowed in self-directed retirement plans, crypto may be best considered a long-term investment, as its value can shift wildly from week to week (and sometimes, day to day).

Therefore, as with investments of any alternative asset, individuals should conduct their full due diligence about how crypto trading works and understand the risks involved in these investments. Research the crypto exchanges, transaction fees, different crypto wallets, and the tax liabilities related to cryptocurrency transactions before making the investment. Note that cryptocurrencies are considered as property, not actual currency, by the IRS, so there may be taxable capital gains associated with the investment’s performance.

Building retirement wealth via crypto

Anyone who is savvy about how blockchain technology works and understands cryptocurrency can include the asset in a retirement plan. Self-direction allows individuals to develop more diverse retirement portfolios by including many alternative assets—including crypto. For people who are comfortable doing their own due diligence and making their own investment decisions, including Bitcoin and other cryptocurrencies in their self-directed IRAs are certainly one way to create that diversity. Understanding the risks and mechanics of this investment is the first step.

Concerned About Market Volatility? Try the Bucketing Strategy for Your Retirement Portfolio: Including alternative assets in a self-directed IRA is a good start

The woes of the stock market’s current performance and increased talk of a possible recession have many retirees and near-retirees concerned about their retirement accounts. How will their balances and portfolios fare in the coming months? For anyone who had hoped to retire this year, they may be reconsidering that retirement date to mitigate the return risks so many investors are enduring right now.

Even though history teaches us that what goes down (eventually) comes up, there is a jittery feeling among investors about their retirement accounts—and their retirement income and investment strategies during periods of short-term but wild market fluctuations.

Bucket strategies are one way to save for retirement—and with a self-directed IRA, employing a bucket strategy with alternative assets can be a game-changer for savvy investors—even for those in the retirement red zone, with a shorter time horizon ‘til retirement.

Allocating retirement assets in a bucket strategy
A bucket strategy is less sensitive to market fluctuations because of the way investments are allocated.

Bucket #1 is the liquidity bucket with savings that can be drawn upon to spend in one to three years. For people nearing or in retirement, the assets in this bucket cover their more immediate needs, especially as they begin taking required minimum distributions.

Buckets #2 and #3 contain the mid- and long-term assets that are invested and awaiting market recovery. For typical investors, these buckets are likely to be stocks and bonds that have suffered in down markets (as we have been experiencing this year, especially during the first quarter) and need time to bounce back.

Include alternative assets in a SDIRA to combat market volatility
For investors who are self-directing their portfolios, they are already poised to meet the challenges of market fluctuations. That’s because the alternative assets they are including in their self-directed IRA (SDIRA) are generally illiquid, long term, and their performance is not correlated with those of stocks and bonds. Plus, they may offer stronger ROI. Real estate, precious metals, private equity funding, commodities, and royalties are among the assets allowed in a SDIRA.

For retirees or near-retirees, an avenue to consider is to open a new SDIRA and invest in alternative assets for those mid-range and long-term buckets. Anyone who still has earned income in retirement may continue to contribute to a Traditional or Roth IRA and there is no age limit, which works well for those retirees who continue to work in some capacity, either for pleasure or because of financial need.

If you are an IRA account owner, remember that by age 73, you must begin taking required minimum distributions (RMDs) from pre-tax retirement accounts such as Traditional IRAs; Roth IRAs are exempt from RMDs, as the contributions were taxed going into the account. If you are self-employed, you can also open a self-directed SEP IRA and contribute from earned income.

Everyone’s cash flow needs are different and long-term projections or financial plans are different. That’s one reason why at Next Generation, we always recommend that our clients discuss their allocation and investment strategies with their trusted advisor and discuss any tax implications that may arise. That said, planning for retirement income is just as important as planning your retirement savings.

If you are interested in learning more about self-directed retirement plans, feel free to watch our webinars, register for an event, read our white papers; or contact our helpful team with questions about the many options and benefits of self-direction. We’re available during regular business hours at 888.857.8058 and your can always email us at NewAccounts@NextGenerationTrust.com.

What to Do With Your Employer-Sponsored Retirement Plan if You’ve Been Laid Off (Hint: Roll the Assets into a New Self-Directed IRA)

The job market has seen its share of ups and downs over the past 24 years (even further back if you consider the dot-com bubble burst of the 1990s). Between the attacks on 9/11, the 2008 housing/mortgage crisis, and the 2020 global pandemic, many Americans have been laid off or chose to enter “The Great Resignation” and not return to the workforce during the pandemic. According to the Bureau of Labor Statistics, 5.3% of families last year included an unemployed person, up from 4.8% in the prior year. (There are lots of statistics here about employment and unemployment rates.

It seems corporations from every sector are laying off employees, restructuring their operations, or downsizing—retail, logistics, biomedical, health care, financial services and more recently, the public sector (such as federal workers).

If you have left a job on your own, been terminated, or are retiring and participated in employer-sponsored retirement plan (such as a 401(k) or 402(b) plan, Thrift Savings Plan, or a SEP or SIMPLE IRA), you need not abandon those hard-earned retirement savings.

Next steps for your retirement plan at a former employer

Depending on your vested balance, you do have some opportunities to continue building a retirement nest egg with those funds.

If the plan sponsor allows, you may choose to leave the assets there and allow the investments to grow tax-deferred, although you will no longer be able to contribute to the account. Be sure to keep tabs on the account’s performance as well as the fees charged for the account. Something else to be aware of is that you will be limited in your investment choices to whatever your previous employer allows. You may also choose to cash out your vested balance, which could be costly in terms of taxes and penalties.

If you go to work for another employer, you may roll over the balance into the new employer’s retirement plan via a trustee-to-trustee or a direct rollover—if the new employer will accept a rollover from your previous employer’s retirement plan. You can read more about rollovers in this previous post.

Another option: open a new self-directed IRA (SDIRA) and move the funds there with a rollover. Doing so enables you to:

• preserve your savings and grow those investments in a tax-advantaged plan
• include alternative assets and develop a more diverse portfolio
• continue contributing to your retirement account
• build a hedge against market volatility since you are not limited to stocks, bonds, and mutual funds

You may already be investing in some of the allowed alternative assets outside of your existing retirement plan—real estate still being the most popular. But self-directed investments may also be private equity, royalties, precious metals, commodities, unsecured and secured loans, and many more. The IRS disallows only life insurance and collectibles in IRAs.

To do a proper rollover, the current retirement account provider (former employer) must send a check, wire, or ACH to the new plan administrator. Make sure that check for the distribution is NOT made out to you; otherwise, you will trigger withheld taxes on the balance. If the former plan sponsor made the check payable to you, you must deposit the distribution within 60 days into the new self-directed IRA to avoid paying taxes on that amount. Whatever you decide to do, it’s always best to consult your trusted advisor first.

Take the first step at Next Generation Trust Company

We have a few steps you can take at Next Generation to generate retirement wealth with a self-directed IRA.

1. Schedule a consultation with one of our helpful team members for information about the many options and benefits of self-direction.
2. Watch some of our webinars that cover various types of alternative assets allowed in SDIRAs (and other self-directed accounts).
3. Go to our starter kits, look for the one associated with the type of SDIRA you want to open, and follow the step-by-step instructions.
4. Open a new self-directed IRA (or solo(k) if applicable) and roll over the funds from the “old” account into the new one.

The professionals at Next Generation are available by phone or email during normal business hours; contact us at 888.857.8058 or NewAccounts@NextGenerationTrust.com for an efficient, courteous response.

Retirement is a Growing Concern Across Generations of Workers

As the stock market swings wildly, saving enough for retirement is becoming ever more concerning for Gen X taxpayers—people born between 1965 and 1980—and even younger generations. Now ages 45 to 60, Gen Xers especially are struggling to reach the financial security their parents attained as the retirement horizon approaches for older members.

Although the youngest of them have catchup time before they retire, saving adequately for retirement among Generation X is competing against daily living expenses and other financial commitments such as saving for children’s education, supporting grown children and/or caring for aging parents. All these factors are cutting into their ability to fund their IRAs and workplace retirement plans.

As reported in Think Advisor, statistics about Generation X and retirement readiness are sobering and show that many are not well positioned for a comfortable retirement today. Only 14% of Gen X Americans feel they have saved enough money for retirement, believing they will need around $1.07 million to retire comfortably; however, this group expects to have only $602,944 saved. Their projected shortfall is higher than what millennials and baby boomers expect.

Further aggravating Gen Xers’ retirement angst:
• More than half (54%) are concerned about outliving their assets in retirement.
• Nearly half (48%) have not done any retirement planning.
• Forty-three percent plan to claim Social Security early due to concerns about the program’s longevity/sustainability.

Retirement concerns across generations

According to the Transamerica Center for Retirement Studies, nearly 80% of the 10,000 respondents to the company’s annual retirement survey said that members of their generation will have a harder time reaching financial security compared with their parents’ generation. And over 70% worry about the future of the Social Security Trust Fund (on track to be depleted by 2035 or sooner). This is despite greater access to employer-sponsored retirement plans, higher participation rates than 30 and 40 years ago, and a median contribution rate of 10%. Those competing financial priorities are cutting into all of that.

These findings were presented in “Retirement in the USA: The Outlook of the Workforce,” Transamerica’s 25th annual retirement survey, which further revealed that:
• More than 8 in 10 employed workers (83%) are saving in an employer-sponsored retirement plan and/or outside the workplace,
• These employees started saving at the median age of 26
• Over one-third (37%) have tapped into their retirement accounts; 31% of that group did so to take a loan, or an early or hardship withdrawal
• The estimated median amount in household retirement accounts is $82,000
• More than half of employed workers (52%) expect their primary source of retirement income to come from self-funded savings (IRAs, 401(k) and 403(b) plans, and other savings and investments.
• However, only 28% “strongly agree” they are building a large enough retirement nest egg.

Increased life expectancy and the costs of long-term care are also of concern—for retirees as well as their adult children who may not yet be saving enough. The Transamerica survey reported that 20% of respondents expect to live to at least 100 years old.

Build retirement savings over the long term in a self-directed IRA

Even if you are an older Gen Xer, you can open a new self-directed IRA and contribute to it as long as you are working. Remember that taxpayers 50 and older can make additional catchup contributions to their retirement plans above the annual contribution limit.

For anyone saving for retirement at any age, investing through a self-directed IRA provides many opportunities to include alternative assets—which are not correlated with market performance and are excellent for long-term growth strategies. Investors who know and understand these types of investments can include real estate, precious metals, private equity funding, commodities, unsecured and secured loans, and many more nontraditional investments in a self-directed plan with the potential for more lucrative growth over time.

Self-direction enables investors to build tax-advantaged retirement wealth with a more diverse portfolio that provides a hedge against market volatility, which we are currently experiencing (and which is stressing taxpayers who are invested in stocks, bonds, and mutual funds).

Our starter kits walk you through the steps to open and fund a new account, and as a convenience to our clients, we have all the forms you need to conduct your self-directed transactions with our team. If you have any questions about self-direction as a wealth-building strategy, contact Next Generation at NewAccounts@NextGenerationTrust.com or 888.857.8058.