For business owners who self-funded their businesses using an IRA (or similar account), our Chief Investment Officer was recently interviewed by The Wall Street Journal and shared some ways that individuals can move shares.
Chief Investment Officer, Mitchell Reiner, says “The key from an adviser’s standpoint is that a corporation growing equity value should be in a more tax-efficient structure than an IRA.” Reiner made this comment referencing a recent couple that needed help in restructuring their business after launching a franchise that they had purchased using a self-directed individual retirement account.
If you find yourself on this side of the coin, keep in mind that keeping business shares inside of an IRA may pose problems–including the potential for a steep tax bill on the profits from that business.
In this case, Reiner suggested pulling shares out of the IRA and then reorganizing the company’s ownership from a C-corporation into a more tax-efficient structure. A few more steps that Reiner suggested were:
— Recommending that the couple buy their shares back from their IRA.
— Encouraging the couple to meet with an advisor who could help them restructure with the help of an attorney and CPA.
To read the full story, please visit The Wall Street Journal.