The Key Role of Self-Directed IRA’s in Crowd funding:

No. 1 Issue for Portals – Attracting Investors

No. 1 Issue for Investors – Return with Tax-efficiency

No. 1 Issue for America – Retirement Fiscal Cliff

What is a Self-Directed IRA?

• A Self-Directed IRA or SDIRA is an IRA that is designed to let the IRA holder invest in alternative assets other than stocks, bonds and mutual funds. They are like any IRA in regards to IRS Code 590 in regard to contributions, distributions, rollovers and transfers

• Self-Directed IRA’s are available in Traditional, Roth, SEP’s, I-401K’s, HSA’s, and Coverdell Educational Accounts

Crowd funding Categories

• Donor or cause- charitable or religious based - Not Applicable for Self-Directed IRA

• Incentive or Pre-purchase – Pebble watch – Not Applicable for Self-Directed IRA

• Peer-2-Peer Lending – Very applicable for Self-Directed IRA

• Accredited Investor – Reg D – Very applicable for Self-Directed IRA Investor

Attract Investors to Portals

Maximize the attractiveness of your offering

• # 1 challenge is reaching investors beyond your own crowd

• Offer a value differentiation among peers and competitors

• Be proactive in addressing the goals and objectives of the investor; offer a compelling story and a compelling tax incentive

• Be proactive in addressing the significant tax increases for investors

Offering Investors Return with Tax-efficiency

• Return – double digit returns – Lendit2013 – Consumer, Small business, Student sectors

• Diversification – “Mainstreaming Alternatives” alternatives returned 14.9% v. S&P 1.9% from 2001-2011-alternatives growing to 27% allocation of portfolios by 2014-2015

• Tax-efficiency – Offer investors tax free (ROTH) or tax-deferred returns using Self-Directed IRA’s

SDIRA’s to Attract Investors-Consider offering a Self-Directed IRA What is the process to offer SDIRA’s?

• Simply create a link to your site or portal• An on-line application generates an account

number in 1-2 hours• Complete an on-line transfer or direct rollover

to fund the new SDIRA• Complete an on-line “Buy Direction Letter” to

direct the investment to the offering via wire

Why isn’t every portal offering Self-Directed IRA’s?

• Awareness – Most portals, investors and advisors have never heard of SDIRA’s

• Brokerage firms don’t/can’t offer them, not in their interest to lose AUM

• The process can be very cumbersome if the Provider does not offer a link for an on-line application

• Many providers take 3-5 days to generate an account number

• Transfers can take weeks if not done right• The right Provider can make or break a

campaign

The Retirement Fiscal Cliff • 78MM baby boomers will bankrupt Social Security,

Medicare/aid between 2022-2032• Retirement portfolios and home values are still down

30-40% • Paltry investments returns in traditional assets of

1.9% from 2001-2011• Where you put new retirement funds, and how will

you get there from here? (my recent experience)

SDIRA’s to Rebuild America Crowd funding can do more than create jobs – it can fix the coming retirement crisis

• The average IRA is a 50 year old with $100,000, invested in P2P Crowd funding could be worth an app. $1.4 MM at 70 1/2

• Health Savings Accounts contributions could be worth an app. $600,000 over 30 years

• A Coverdell Education Account could be worth an app. $180,000 over 20 years

James A Jones

jjones@kingdomtrustco.com

978-500-5791

The Key Role of Self-Directed IRA’s in Crowdfunding and the JOBS ACT