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SCRIPT
In this video, you’ll learn about the varying differences between Self-Directed IRAs and Rollovers as Business Startups.
Both Self-Directed IRAs and Rollovers as Business Startups (ROBS) are designed to enable you to invest in private, small businesses and startups, but which account is the right choice for you? Let’s compare to discover your small business style.
Sponsored vs. Solo Start
ROBS are traditionally employer-sponsored programs. To fund your account, you must be the owner of a 401(k) or other qualified retirement plan. Self-Directed IRAs allow you to transfer or roll over funds from an existing retirement account, or you can make an initial contribution.
Active vs. Passive Participant
Under the ROBS guidelines, you are required to behave as an active employee of your business. You will be earning a salary once your business starts earning revenue. This means you must be willing to be an active player in your startup. As a Self-Directed IRA owner, you are prohibited from owning more than 50% of the business. You also are not permitted to run or influence any business decisions in any capacity. Moreover, no individual with a substantial connection to you should be in control of the company. Your role is that of a passive investor.
Corporately Taxed vs. Tax Exempt
ROBS are taxed like business corporations since they possess the same structure as one. Due to its complexity, a specialized tax or legal professional typically oversees documentation to ensure its compliance. For Self-Directed IRAs, all incoming revenue is considered growth of the IRA and develops with tax advantages.
Hopefully, you now have a better idea of your small business investment style. When it comes to Self-Directed IRAs, Madison Trust is here to educate you on the self-directed investing process. Discover how you can potentially stylize your future for success!
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12 июн 2024
