An investor account is a custodial account maintained for the benefit of AngelList investors. You can transfer funds from your bank to your investor account and use those funds to invest in startups and syndicates.
You can also use the account to receive distributions when one of your investments has an exit.
As an investor in the fund, we are required to send you a K-1 from the fund when it has a filing requirement. The fund also send a return to the IRS. Whether or not you need to file a US tax return depends on many factors. We suggest that you contact a CPA or tax attorney who can give you personalized guidance.
Consistent with US Tax rules, investments are written off when the fund administrator is able to determine and document that the investment has become entirely worthless. The wind-down process can sometimes last many months and the formal tax write off can sometimes occur substantially after a company first announces that is shutting down.
Many funds that hold only equity securities neither receive income nor incur any expense during the year and therefore have no tax filing requirement. As such, no K-1s are issued for these funds.
As we are not tax advisors and so cannot provide advice in filling out the form. Please click on the links below for instructions to the forms. If your require any additional guidance, we suggest that you contact a CPA or tax attorney who is familiar with your situation and can provide you with individualized advice.
A self-directed IRA is just like any other Individual Retirement Account (and can be a traditional, Roth or SEP IRA), but instead of limiting you to invest in public company stocks, bonds and mutual funds like IRAs held by your broker-dealer or bank, self-directed IRAs are set up to allow you to invest in a broader range of assets, including alternative investments like private company stock, notes, and real estate and. The gains from investments properly made in a self-directed IRA are tax-deferred or tax free, just like the gains in any other IRA.
All IRA accounts are required to be held through a trustee or custodian. The trustee/custodian provides custody of the assets (documents and cash), processes all transactions at the direction of the IRA owner, maintains records pertaining to the account and transactions, files required IRS reports, issues client statements, helps clients understand the rules and regulations pertaining to certain prohibited transactions, and performs other administrative duties.
At this time, AltoIRA is the only self-directed IRA provider integrated with AngelList.
AngelList does not charge any fees for IRA investing. Self-directed IRA administrators charge annual administration and other fees. For AngelList investors, Alto offers no-hidden fee pricing as follows:
AltoIRA fees for AngelList investors:
Separate fees apply for use of AltoIRA services outside the AngelList platform. For further information on pricing and terms visit www.altoira.com.
The vast majority of startup investments on AngelList can be made using an AltoIRA account. Some restrictions do apply, however.
You cannot use your self-directed IRA for certain prohibited transactions, such as investments in start-ups controlled by you or your family. You are responsible for determining your eligibility to make any investment through a self-directed IRA and should consult with your tax adviser before making investment decisions using IRA funds.
When you set up an AltoIRA account, you will give Alto directions to transfer funds from your existing IRA at another institution into your new self-directed IRA with Alto. This transfer of funds process can take 3-5 days on average, so if you are investing in an AngelList deal with a closing deadline, please plan accordingly. The same goes if your AltoIRA account lacks sufficient funds when you need to make follow-on investments and capital call contributions.
For this reason, we suggest planning ahead and keeping a balance in your AltoIRA account.
K-1s for investments made through your self-directed IRA will be sent to your IRA administrator. Investment income and gains in your AltoIRA account should be treated for tax purposes like any other IRA account of the same type (Traditional, Roth or SEP as the case may be). There are circumstances in which the income produced by an investment in your IRA could trigger certain types of taxes. For example, funds that invest in limited liability companies may generate Unrelated Business Taxable Income (UBTI) and/or Unrelated Debt-Financed Income (UDFI) that would be taxable for your IRA. Your IRA administrator will provide you with appropriate tax forms for your IRA account.
AngelList cannot advise you on the tax consequences of your IRA investments.