Retirement $$$ in a Hedge Fund?

I got a question.

Can a hedge fund or investment partnership accept money from retirement accounts?

Does the answer depend on the type of retirement account?

I'm pretty sure the answer is "No" for a 401k or IRA account. Is this correct? Please give references/links.

I do know that pension money has been invested in hedge funds.

What about other account types? What about a "Pension and Profit Sharing Plan"?

Any of yous guys gotta any clue as to what Ima sayin?

 

Generally if a hedge fund is open to accepting investments of "pension money" they'll also be happy to accept money from P/S plans, IRAs, 401(k)'s, SEP, Kepgh etc.

The bigger "problem" for many folks is finding a retirement administrator (e.g. the IRS administrator) who will allow non-traditional investments to be made.

 

What if the hedge fund uses leverage and margin, trades futures/commodities, shorts, etc. All the things you can't do in a cash account, which I thought all retirement accounts were?

It's got me all bumfuzzled...

 

I believe there are multiple share classes.

I know there are at least 2 different classes for those that are eligible for hot issues and those that are not.

 

All 100% legal.

But: "The bigger "problem" for many folks is finding a retirement administrator (e.g. the IRS administrator) who will allow non-traditional investments to be made."

 

Let me see if I got this straight...

Say I work for a small company and have a pension and profit sharing plan. I could go the plan administrator and, if they agree, I could invest in SAC or whatever fund I could afford? What about the capital gains? Non-taxable?? {drooling}

Sorry, gotta go eat. Dinner bell just rang. I'll be back. Y'all are really helpful. I love this place!

 

Fund can usually take up to 25% ERISA money without running into issues.

 

First to fix my earlier typo - The bigger "problem" for many folks is finding a retirement administrator (e.g. the IRA administrator) who will allow non-traditional investments to be made.

Second, While I'm not challenging the 25% rule directly, and I've heard it referred to before, I do know that small boutique firms have 100% retirement plan money. Here's a non-affiliated link from my web site: http://www.webcpa.com/article.cfm?articleid=20043&searchTerm=maxwell (Baron doesn't want me to post links regarding my own web site, but this link is not economically affiliated with me in any way).

 

If the plan is a Roth, yes.

Otherwise, the tax is deferred until you make withdrawals.