Using Retirement Accounts to Invest

Qualified retirement plans offered by an employer, such as 401(k)s, 403(b)s, SEP IRAs, and SIMPLE IRAs, do not allow for direct investment into private (i.e. not publicly traded) securities. Similarly, funds in traditional IRAs and Roth IRAs cannot be used to make direct private investments. However, the growing interest in local impact investing is driving a trend toward the creation of Self-Directed IRAs and Solo 401(k)s (the latter for self-employed people) that do allow the investment of tax-deferred retirement funds into local investments.

Michael Shuman, one of the original founders of the Local Investing Resource Center, and author of several books on local economies, is slated to publish a new book in Spring 2020 with a specific focus on creating SDIRAs and Solo 401(k). Once the book, titled Put Your Money Where Your Life Is,” is published, we will update this section. In the meantime, this blog post from Slow Money Northern California provides useful insight and tips.