My formal training and background is in investment
performance measurement, so I am reasonably educated on
matters of portfolio management and analysis. However, my
knowledge of club administration and regulation is marginal
at best. We (the club members) modeled and drafted our club
agreement after the Limited Partnership Agreement of Mutual
Investment Club of Detroit Limited Partnership. We did so
with the intention of making the IRA option available to our
members. We have not added any IRAs yet but we expect to do
so before the close of the calendar year. Some of our
members have self-directed 401Ks. I personally have a
self-directed solo 401K. Can self-directed 401Ks participate
in a similar fashion as self-directed IRAs?


Jeffery

> We (the club members) modeled and drafted our club agreement after the
> Limited Partnership Agreement of Mutual Investment Club of Detroit Limited
> Partnership. We did so with the intention of making the IRA option
> available to our members. <

My understanding of how this is supposed to work is that the IRA custodian
(bank, broker) must become a limited partner of your investment club.
Presumably that means you'd need to find a bank or broker willing to agree
to that arrangement (and sign your limited partnership agreement).


> Can self-directed 401Ks participate in a similar fashion as self-directed
> IRAs? <

Here too, presumably, you'd need to find a self-directed 401K
custodian/trustee willing to become a limited partner in your club.

NAIC's Investment Club Operations Handbook has a few passing references to
this issue (pages 54, 83, 114-115). The page 114-115 reference says ...
    "If your investment club account is part of an IRA
    or other tax-deferred retirement account, special
    penalties and taxes may apply to withdrawals.
    Your treasurer should be clear on how a
    limited partnership is treated differently than
    a general partnership for tax purposes."

Starting and Running a Profitable Investment Club has a somewhat more
complete discussion (in my 1996 edition, starting on page 186).

-Jim Thomas

Jim Thomas wrote:
> > We (the club members) modeled and drafted our club agreement after the
> > Limited Partnership Agreement of Mutual Investment Club of Detroit Limited
> > Partnership. We did so with the intention of making the IRA option
> > available to our members. <
>
> My understanding of how this is supposed to work is that the IRA custodian
> (bank, broker) must become a limited partner of your investment club.
> Presumably that means you'd need to find a bank or broker willing to agree
> to that arrangement (and sign your limited partnership agreement).
>
>
> > Can self-directed 401Ks participate in a similar fashion as self-directed
> > IRAs? <
>
> Here too, presumably, you'd need to find a self-directed 401K
> custodian/trustee willing to become a limited partner in your club.
>
> NAIC's Investment Club Operations Handbook has a few passing references to
> this issue (pages 54, 83, 114-115). The page 114-115 reference says ...
> "If your investment club account is part of an IRA
> or other tax-deferred retirement account, special
> penalties and taxes may apply to withdrawals.
> Your treasurer should be clear on how a
> limited partnership is treated differently than
> a general partnership for tax purposes."
>
> Starting and Running a Profitable Investment Club has a somewhat more
> complete discussion (in my 1996 edition, starting on page 186).
>
> -Jim Thomas




Thx Jim