Attract IRA Investors: 3 Simple Steps
Individual Retirement Accounts (IRAs) are a popular way for investors to save for retirement with tax benefits. As an issuer, offering investments that are IRA-eligible can attract a broader audience. This article outlines 3 simple steps to help issuers enable IRA investments in their offerings, making the process easy for both you and your investors.
Understanding IRA Types
Let’s start with the basics. Not all IRAs are created equal. Each type comes with its own set of tax perks, so understanding them is key to figuring out which investors you want to attract.
| Traditional IRA | Contributions are tax-deductible, but withdrawals during retirement are taxed as regular income. |
| Roth IRA | Contributions are made with after-tax dollars, allowing for tax-free withdrawals at retirement. |
| SEP IRA | Commonly used by self-employed individuals and small businesses, where only the employer can contribute to the plan. |
| SIMPLE IRA | For small businesses, with both the employer and employee contributing to the plan. |
Tip: Identify which IRA types are most relevant to your target investors. Understanding their preferences helps tailor your offering to attract the right participants.
Knowing What IRA Custodians Can and Cannot Do
IRA custodians play a vital role in approving your offering for their clients’ IRA accounts. However, their involvement is governed by strict regulations, which can limit what they can do to support your fundraising efforts.
What they can do:
- Custodians can review and approve your offering to ensure it meets their standards.
- They can allow you to promote your IRA-approved offering to their clients.
What they cannot do:
- Custodians are not allowed to actively market your offering to IRA holders due to regulatory restrictions.
To ease the approval process, make sure your offering aligns with custodian requirements early on. This preparation can minimize delays and help get your offering in front of IRA account holders faster.
Now that we have a clear understanding of IRA types and the role of custodians. Let’s check the 3 steps to make your offering IRA-friendly.
Step 1: Prepare the IRA Package for Investors
Simplifying the process for investors is critical. When investors use their IRA to invest, the process can be more complex than with traditional accounts. Your goal is to provide a streamlined experience that encourages participation.
Here’s what you’ll need to include:
- Contact information for IRA custodians who are familiar with your offering.
- Legal and regulatory details to assure investors that their retirement accounts are in compliance with IRS rules.
- Clear instructions on how to make the investment through their IRA.
Remember to provide a well-prepared package to reduce the steps required for investors. By making the setup easy, you reduce friction and increase the likelihood of IRA participation.
Step 2: Contact Your Broker-Dealer (BD)
Before moving forward with your offering, you need to ensure that your broker-dealer is informed and involved. Depending on the type of offering, different rules will apply.
- Reg CF: You must obtain approval from a broker-dealer before allowing IRA investors.
- Reg A+ and Reg D: Notify your broker-dealer of your target IRA custodians and ensure all compliance requirements are met.
✅ Keep your broker-dealer informed and maintain open communication. This helps avoid delays, ensures compliance, and accelerates the process of getting your offering approved.
Step 3: Reach Out to the IRA Custodians
Once you’ve aligned with your broker-dealer and prepared your investor package, the next step is to connect with IRA custodians directly. Provide them with all necessary details to get your offering approved.
Click here to get a list of all of them.
Key information to provide:
- Legal and contact details of your offering.
- Links to your offering and any required filings.
- Clear instructions for custodians to review and approve your offering for IRA investment.
Thorough documentation can lead to a quicker approval process. This step ensures custodians have everything they need to help you get your investment offering to their clients.
Final Thoughts: Start Promoting Your IRA-Approved Offering
Once you’ve secured approval from IRA custodians, it’s time to start promoting that your offering is IRA-compatible. This can set your offering apart and appeal to a broader range of investors looking to diversify their retirement savings.
Consider using a mix of marketing strategies to spread the word:
- Email campaigns informing potential investors about the IRA-eligible nature of your offering.
- Ads targeting investors who are specifically looking for IRA investment opportunities.
- Webinars to provide detailed information and answer investor questions in real time.
Ready to Accept IRA Investments in Your Offering?
By following these five steps, you’ll make it easier for your investors to invest through their IRAs. To simplify things further, consider compiling a list of trusted IRA custodians who can assist your investors. This ensures the process is as seamless as possible for both you and your investors.
Get Started Now!
Download our list of IRA Custodians today and take the next steps toward enabling IRA investments in your offering.
Disclaimer: This article is intended for informational purposes only and does not constitute legal or investment advice. Always consult with your legal, tax, or financial advisor before making any investment decisions.
