Polycomp > Investor Choice IRAs > Investment Choices > Privately Held Stock

Privately Held Stock

Investing in small businesses and startups structured as C-Corporations (but not S-Corporations).

Privately held companies are companies whose stock is not traded publicly, i. e., the stock cannot be bought and sold on a stock exchange. Often these companies are just forming or are owned by a single family. To invest IRA funds in a privately held company, the IRA Owner and his or her lineal descendants combined must own less than 50% of the company at the time of purchase, or a disinterested third party must own the company.

A corporation can issue two general types of stock: common stock and preferred stock. When purchasing privately held stock a subscription or purchase agreement is required. The Custodian holds the original stock certificate(s) in safekeeping. For a rollover, transfer in-kind, or purchase of stock from a current shareholder, additional documents will be required. S-Corporations can only have individuals as shareholders; therefore, an IRA cannot invest in S-Corporation stock.