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Hello,
I have a couple of questions regarding investing a 401k or IRA into a private business. From what I understand, 401k or IRA funds can be invested in a private company under certain conditions. One condition is that the 401k/IRA owner is not the majority owner of the business. Does a spouse's IRA count towards majority ownership?

For example, consider the following ownership structure of a company:
I own 20% of the company through my IRA.
I own an additional 20% through a non-IRA investment.
My wife owns 20% through an IRA.
Parent owns 20% through non-IRA investment.
Various friends and outside investors own remaining 20% through non-IRA investments.

My wife and I have signed a pre-nuptial agreement stating that our 401ks/IRAs are not community property. In case of divorce we each take our own retirement money. However, we are beneficiaries on each other's retirement accounts.

So under that scenario I directly own 40% of the company but my wife has 20% ownership through her IRA. Am I considered a majority owner?

Next question (assuming prior is legal), what happens if my wife or parents die and I inherit their stake? I suddenly become a 60% majority owner.
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Nevermind.

As I was doing more research I found out that a person cannot invest their IRA into a private company they are an officer in. Unfortunately that negates any reason for me to consider investing my IRA into a private company. Sorry for the interruption.
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Who is the IRA going to purchase the 20% of the company from?
You?
Parents?
Wife?

If so, that'll be a problem.

Who's going to work for the company? Manage it?
Since it's small enough that 20% can be owned by your IRA, and 20% by your wifes IRA - I'm guessing it's a family business, so probably the answer will be one or more of the above - which will be a problem.

I'm hoping you're just looking for a general feedback on whether this is possible, and you're going to consult a tax expert (and lawyer) if you do go forward. Because the advice is usually good on this board, but *I* wouldn't rely on it for something like this.
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One more thing you have to consider is if the state you're living in is a community state, in which case 50% of yours is hers and vice versa.

So even if you had 40% in the company and she has 20%, you actually really both have 30% each in it, as retirement investments are also considered community property.

On top of that, in your math, you would actually be the majority owner, not absolute (as no one would have over 50%) majority, but you would hold the relative majority (as no one holds more than you and your spouse each).
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