We want to make you aware of some proposed changes to the laws governing individual retirement accounts (IRAs) as part of the $3.5 trillion reconciliation package. These changes, if enacted into law, would have a direct negative impact on you and your ability to save for a secure retirement through a self-directed individual retirement account. 

How would the proposed legislation affect me?

The proposed legislation would prohibit IRAs from holding privately-placed equity and debt securities and other investments that require the IRA owner to meet certain minimum financial, educational or licensing requirements. For example, the legislation would prohibit IRAs from holding unregistered investments that are offered to accredited investors, like equity or debt investments in small businesses or investments in private funds. 

The bill would also prohibit IRA owners from investing in (1) non-publicly traded entities in which the IRA owner and related entities (including the IRA itself) own more than a 10% interest or (2) any entity in which the IRA owner is an officer or director, regardless of ownership percentage. By way of example, single-member limited liability companies or any investment in an entity in which an individual is a director or officer could no longer be held in an IRA.

IRAs holding any of the above investments would lose all the tax advantages previously available to the IRA.

If the proposed legislation is enacted, you will no longer be able to purchase any of the above investment types in your IRA. Further, you will be required to dispose of any such investments that you currently hold in your IRA by no later than December 31, 2023, which could result in significant and previously unforeseen financial and tax consequences, including taxes and penalties associated with any assets that could not be sold and must be distributed from the IRA.

So What Can You Do To Stop This?

Make your voice heard. Contact your elected officials in the United States House of Representatives and Senate,

Not sure how to contact your U.S. Congressional Representative?                        

Go to: https://www.house.gov/representatives/find-your-representative

Not sure how to contact your U.S. Senators?

Go to: https://www.senate.gov/senators/senators-contact.htm

Click below to download a sample template letter.

Download Sample Letter

Here is additional information from Sections 138312 and 138314 of the House reconciliation bill.

Check back on our website for additional updates on this and other proposed tax changes.