Smaller companies in the renewable energy field can seek investment capital by going down a different path. They appeal to the millions of American’s with self-directed individual retirement accounts (IRA), which have a collective asset value of $90 billion. To bring in some of this money, companies create what are known as alternative investment products such as private stocks, limited partnerships, promissory notes and similar financial instruments. These investments aren’t traded on an organized public exchange and require special expertise to establish value. So, What Does a Custodian Do? When one of its current IRA clients is considering an alternative investment or if a prospective client wants to open an account and purchase a specific alternative, the custodian’s first duty is to review all of the sponsor’s offering documents to determine if it meets clearly defined IRS suitability requirements. Assuming it does, the custodian handles the purchase (explained below) and then assumes responsibility for all related administrative functions until it is sold, matures or is otherwise removed from the account.
Posted on: Wed, 17 Sep 2014 10:55:40 +0000
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