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159: Reporter on the Street | Can You Use Retirement Funds to "Invest" In A Nonprofit? With Jeff Beck
Episode 159

159: Reporter on the Street | Can You Use Retirement Funds to "Invest" In A Nonprofit? With Jeff Beck

Charity Therapy · Birken Law Office PLLC

March 5, 202623m 18s

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Show Notes

Do you know someone eyeing their retirement accounts to fund their nonprofit dreams? We need to talk!

In this episode, I'm joined by Jeff Beck, a wealth advisor at COE Financial Group, to tackle a listener question that had me equal parts fascinated and horrified.

Real Listener Question:

"My partner has a traditional IRA with about $100,000 in it. Can she invest that money in my 501(c)(3) without penalties? Do we need to set up a for-profit company for her IRA to invest in first? Are there IRS rules against her investing in something I founded and run?"

Jeff and I dig into the mechanics of IRAs, self-directed accounts, and what the IRS actually allows when it comes to retirement funds and charitable giving.

Spoiler alert: nonprofits DO NOT have shareholders so you can't "invest" in them and get a return! There are some serious red flags here, both on the legal side AND in this interpersonal relationship.

What You'll Learn:

  • Why you can't really "invest" in a nonprofit
  • How giving to a nonprofit can benefit an individual's tax position
  • What a self-directed IRA is and what you get to do with it
  • One legitimate way to donate your IRA funds to a nonprofit tax-free
  • Why getting "returns" on your contribution can put a nonprofit's tax-exemption at risk
  • How you can financially hurt yourself when you're starting a new organization

Bottom line: Using your (or your significant other's) retirement fund to set up your new business is probably NOT a good idea. Protect yourself, protect your partner, and please, let that IRA grow.

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