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Managing your Private Equity Investment

After you've completed your investment, you can manage your portfolio and take the following actions within our online portal. 

Capital Calls & Additional Funding 

A capital call, installment or additional funding is very similar to the initial purchase process.   

Required forms for an additional funding are:  

  • Private Equity Buy Direction Letter – Reflecting the new amount to be funded  
  • Wire instructions if funding via wire  
  • Capital Call Letter – Entity will supply the Capital Call Letter OR a new Subscription Agreement. For additional funding, a new purchase or subscription agreement may be required by the entity.  
  • If the entity is a Closely Held LLC that is managed by the account holder, the capital call letter can be written and signed by the account holder/LLC manager.  

Please note that additional funding depends on whether the operating agreement of the company allows for it.  

Selling your IRA Owned Private Equity/Stock 

If you would like to sell your IRA-owned private stock, you will first need to find a buyer to purchase the private stock. Typically, stock will be purchased by the entity you invested in or a private individual. There are some disqualified persons to whom you cannot sell your private stock. Remember, disqualified persons include you, your spouse, your parents and grandparents, your children and their spouses, as well as some business partners/fiduciaries. The fees associated with a Private Equity Sale include a transaction fee.   

To process a sale of private stock, New Direction Trust Company will need the following items:  

  • We will request an assignment letter if you are selling to a private individual.  
  • Payment- The account holder must work with their investment provider to arrange payment, ensure payment is made out to the IRA titling, and ensure payment to NDTCO.   

 New Direction Trust Company requires your complete, correct paperwork 3 full business days prior to the sell date. NDTCO does not work with the investment to negotiate or effectuate the sale. 

Prohibited Transactions 

A prohibited transaction is any transaction that takes place between an IRA and any disqualified person or entity. The following actions are considered prohibited transactions and could result in the distribution of this asset from your plan and may also include IRS penalties. Prohibited transactions apply to all disqualified persons to your plan.  

  • Engaging in a private equity transaction (buy, sell or any other type of transaction) between your account and a disqualified person  
  • Yield a commission/fee for the purchase, sale, or exchange of assets  
  • Cover account expenses with personal, non-account funds  
  • Use of your IRA’s assets as collateral for a personal loan  
  • Use of your IRA’s assets to guarantee credit for a loan  
  • Receive dividend, distribution or sale payments directly instead of having them go to the IRA  

While we can share IRS rules with you, NDTCO does not give tax, legal or investment advice so you may be referred to your financial or legal representative for further details or a possible solution.  

All expenses for the investment are the IRA’s responsibility. Never pay any bills with personal funds. Such payments may be considered prohibited transactions, which could jeopardize the tax-advantaged status of your IRA.  

Cash Flow 

All earnings from private equity investments must flow directly back to your retirement account. Ensure that your investment knows to send any dividends, profits, returns of capital or sale proceeds back to your NDTCO IRA, not to your personal bank account. Receiving any of these payments personally, instead of through the IRA, may be construed as a prohibited transaction and result in the distribution of the IRA entirely along with taxes and penalties.   

Payments back to your retirement account can be made through the following options: 

Checks Mailed to NDTCO 

  • We cannot deposit any earnings from your investments via check into your IRA that are made payable to you personally. Any such checks will be returned. All checks need to be accompanied by a deposit coupon.   
  • Ensure the checks are payable to your IRA as follows: NDTCO, as Custodian, FBO Account Holder’s Name IRA.   
  • There is a 5-business day hold on incoming checks beginning on the date of deposit.  
  • Checks can be mailed with the deposit coupon to our office:  
  • New Direction Trust Company  
    1070 W. Century Drive.  
    Louisville, CO 80027 

Deposit Service 

  • If you are expecting regular ACH dividends, we can help you by setting up a complimentary deposit service for those dividends to flow into. Once the deposit service is set up, it will be specific to your NDTCO account and a single asset in your account. You will receive a specific ABA/routing number and account number via portal message, which you can give to your investment for setting up direct deposits. No fees apply for the complimentary deposit service, this is included in your NDTCO annual administration fee.  
  • For NDTCO to establish a deposit service account, please submit a portal message request online. You will need to provide the following information…   
  • Type of deposit (contribution, rent, dividend, etc.)   
  • Asset the deposit is associated with   
  • Percentage of ownership if it’s split with another account holder   
  • Which account is applicable if you have more than one account.    

Transfers Out/Distributions 

In the event you would like to transfer or distribute all or part of your IRA investment in the future, make sure the entity in which you would like to invest will allow the ownership to be assigned or reassigned. Keep in mind that some investments do not allow the investor to sell ownership units or withdraw funds during a fixed period. If you happen to be over the required minimum distribution age and have a traditional IRA, this may affect your ability to take your mandatory distributions from the account.   

  • If your distribution strategy or required minimum distributions are cash based, you will need to plan ahead to make sure your cash flow matches your cash distribution needs.   

Legal/Accounting Fees 

  • If fees or bills need to be paid, such as legal or accounting fees that relate to the investment, those should be paid out of the IRA using our online Bill Pay System.   

Annual Fair Market Valuation 

Per IRS regulations, each retirement account must be valued annually.  Once per year, NDTCO accounts that hold private equity must complete a Fair Market Valuation (FMV).   

Supporting documentation from a qualified 3rd party is required for the valuation to be processed. 3rd party documentation may include a valuation letter or annual shareholder statement from the investment company, a CPA, an attorney, or a public document.   

Supporting documents not accepted: Schedule K-1s (which report annual earnings or losses but not fair market values), documents older than 6 months from creation date, recorded phone conversations, or e-mails do not constitute valid supporting documentation.  

Failure to provide an annual valuation may result in the taxable distribution of your asset. Accounts that have shown no activity, including the valuation, will not be held by NDTCO because we cannot meet the IRS requirement to annually update the value of your IRA and file an accurate IRS Form 5498 for your account.   

To complete a Fair Market Valuation Form, please:  

  • On the Overview page, find the appropriate asset and select Take Action in the right-hand column, and then choose Valuate.    
  • Provide any requested information and upload your supporting documentation.   
  • Agree to the Terms & Conditions and click Submit. Done!   

In-Kind Distributions 

To take an in-kind distribution, the following items are needed….  

  • Distribution and Notice of Withholding Form – this can be completed through the portal. To access the form, login and select ‘Distributions’ from the left-hand options. Complete the section for in-kind distributions.  
  • Updated Subscription Agreement from the company, showing the updated investor as yourself instead of your IRA (with the account holder’s read and approved).  
  • Fair Market Valuation (FMV) will need to be completed with documentation submitted within the past year prior to the distribution. The FMV requirement is waived if the asset was purchased by your account within the past year prior to the distribution.  

In-kind distributions will incur both a distribution fee (unless the account holder is taking an RMD) and an in-kind asset re-registration fee.  Please refer to our fee schedule for details.  

In-Kind distributions are reported as income on tax form 1099, please seek counsel from a qualified tax professional if you have any questions about the form or how to report it with your taxes.  

Private to Public Equity Conversion 

To convert your asset, the following items are needed: 

  • Supporting documentation of the Conversion from your Investment Company (Letter, Memo, Email, etc.)  
  • Current Account Statement from Investment, Holding Agent or Transfer Agent (within the last 60 days).   

Once we have received all the required documents, we are able to begin processing your asset conversion.   

Unrelated Debt-Financed Income (UDFI/UBIT) 

Earnings from some investments may be subject to Unrelated Business Income Tax. If your investment’s entity has earnings from the sale of goods/services or earnings from debt, consult with your tax professional to determine if UBIT is owed. You, as the IRA holder, are responsible for determining if the earnings are taxable or not. If so, you must file form 990-T with the IRS.  

NDTCO does not calculate UBIT or submit form 990-T. Click here  to download our free UBIT calculator.  

See here for more information on UDFI, UBTI, and UBIT.   

Managing Your Account 

Our online portal combines human power and digital innovation, making it simple to view all your account information in one centralized location. Within the portal, you have the ability to directly message our support team, review recent transactions, download account documents, and review a vast library of educational content easily and securely.   

Simply log into our Online Portal to access and manage all of your account information.   

Learn more.  

Forms 

  • Private Equity Buy Direction Letter-This form directs us to purchase the asset. This form can be accessed through the portal from the Invest tab on the lefthand side.   
  • Sell Direction Letter-This form directs us to sell the asset. Please upload supporting documentation while completing the Sell Direction Letter.  
  • Publicly Traded Securities Conversion Form-The Publicly Traded Securities Conversion Form is used if your NDTCO account holds an investment that was previously a private investment, but the company has since had an IPO and your stock needs to be converted from private to public.  
  • Manager’s Acknowledgment Letter – Required document for Private Equity transactions with fewer than 10 total investors. To be completed by the manager.