Hi, can someone answer a quick question. I know that I'm legally allowed to create a 401(k) plan and invest the proceeds in my own hedge fund. Unfortunately, I've talked to about a dozen plan providers and they all have a very limited list of funds that I can invest in. Unfortunately, mine is not one of them.... LOL. Does anyone know of an organization or plan providor that would allow me to invest in my own hedge fund?
It's hard enough to find an IRA custodian who'll hold small private placements. The single person 401k is such a new creation that the few administrators out there are probably all sticking with mainstream asset classes. Please let me know if you are successful, though.
Maybe I can answer your question. First, I manage a LLC or fund. I have my IRA and several partners have IRA funds invested. 401K plan is different than a SEP or IRA plan. With SEP's and IRA's all you need to do is find a trustee or custodian to allow you to put funds into your fund. I use Retirement Accounts Inc. in DENVER.....you send them all your disclosure docs. of your fund, after their compliance dept. approves it, you are ready to go. You and any other qualified investor would establish you SEP or IRA at their firm and you authorize them to purchase units in your fund. Very simple. Whats great about it is you can short and go on margin with those funds in your fund. Its just like as if you purchased a mutual fund that uses leverage or shorts. The only thing thats a concern is the possible UBTI thats generated when you are leveraged. I'm dealing with this now. Its no big deal....its just you must pay a tax on those profits generated when your fund was on margin.
Why would you establish a 401k plan rather than a SEP or IRA? I could see if you are an employee of a company but a 401k has extra restrictions........such as limited ability to self direct it. If you are in a 401k plan already than you are stuck until you leave the company or the plan is disolved. At that point you could roll it over to an IRA.
What advantages do an IRA/SEP give you. I thought that a 401k let you put the most possible each year into your retirement and invest it tax free.
P2, where are you getting the earned income to put into a qualified retirement plan? I have no earned income because all the trading profits are capital gains. While it is nice to not have to pay self employment tax, it also means no IRA contribution.