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Investing in Partnerships and Private Stock with a Self Directed IRA

Offerings and Extraordinary Investments

Partnerships

Registered and unregistered interests in Limited Partnerships may be purchased and sold by IRAs and Qualified Plans.

The general rules regarding acceptability of partnership investments in your account are:

1. The partnership agreement must permit an IRA or a Qualified Plan to be a partner.
2. The partnership interest purchased by your account cannot have any management responsibility; liability from any cause cannot exceed the amount of your investment; and a voting majority is not permitted.
3. The partnership entity must comply with the appropriate state law, have a determinate life, and be assignable.
4. The partnership subscription agreement must be signed by you as having been read and approved and will be executed by us for your benefit. In addition, you will need to complete and send us a Buy Direction Letter For Other Than Real Estate for the transaction. FAX transmission of this is acceptable but the original must follow. The investment amount must be stated or funding cannot take place.
   

NOTE: Partnerships may be subject to unrelated business income and other taxes. You should consult your tax advisor for proper direction.

Limited Liability Corporations

Limited Liability Corporations (LLCs) are considered securities in many states and may be required to meet the standards of securities offerings. Offering memoranda, circulars and subscription and investor suitability information are provided by the managers of LLCs. The rules and procedures regarding investing IRA or Qualified Plan Funds in LLCs are the same as those for partnerships.

Investing in Private or Closed Corporation Stock

Private or Closed Corporation Stock Offerings are those stock offerings not available to the general public. Normally, they will be made to pre-qualified individuals. These offerings must comply with the securities Blue Sky Laws in the states in which the offering will be made. The number of individuals included in the offering cannot exceed the maximum stipulated by those states' laws.

Offerings, usually made by corporations looking for capitalization, may be in any class of stock described in their prospectus. Many corporations act as their own registrar as well as transfer agent. They may or may not have market makers for their offerings. Purchases and sales are described in their offering materials.

Purchases and sales of private or closed corporation stock are accomplished by completing either a Buy or Sell Direction Letter which specifies the number of shares, the price per share, and the total dollar amount of the transaction. Although you will read and approve the necessary subscription documents, the actual subscription will be executed by us for your benefit.

Extraordinary Investments

Extraordinary investments include unsecured loans, factoring or accounts receivable financing, building bonds, security agreements and notes, tangible asset deeds, tax lien certificates, commercial paper, leases, contracts of sale, joint ventures, and like and unlike exchanges. Some investments may need to have security interests perfected with UCC filings.

Commodities and futures trading are also permitted. Although subject to strict regulation, special arrangements are possible regarding covered margin accounts for such investments.

Limited partnerships which invest in collectibles may be acceptable investments for your account if the partnership was not formed with the express intent to circumvent the tax laws.

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