Private Placements

Get In on the Ground Floor with Private Placements

Entrepreneurs are the foundation of The American Dream. Great ideas and hard work created this country. Yet, even the best and brightest entrepreneurs need working capital to get their start. Provide that capital with a private placement from your CamaPlan and you could get in on the ground floor of a great opportunity. Early investors in profitable, high-growth companies typically earn huge returns on their investments.

Unlike loans, private placements are not repaid per a schedule by a borrower. A private placement is an equity investment in a business venture whose shares are not offered to the public or through an open market. The investment entitles the CamaPlan account to an ownership percentage of the venture’s earnings and value, and importantly, its costs and lost value. Without the regulation, transparency, and scrutiny that a public offering would ensure, private placements are considered riskier. You should perform necessary due diligence on any private placement to fully understand its risks before investing. Here are the more common private placement types:

  • Limited Liability Corporations (LLCs)
  • Limited Partnerships (LPs)
  • Trusts
  • Corporations (S-Corp prohibited)
  • Joint Ventures
  • Investment Clubs
  • Structured Settlements
  • Hedge Funds
  • Checkbook LLCs

Read informative articles on investment options in The Resource Center. 

Prohibited Transactions

The IRS does not specify the types of private placements that can be made by tax-advantaged savings accounts; it only specifies investments you cannot make. Refer to IRS rules and regulations for complete information on prohibited transactions, including its definition of disqualified persons (ex., spouse, children, parents, a fiduciary et al). The structure and form of your investment can also vary depending on the type of CamaPlan account you open.

Popular Private Placement Programs

Limited Liability Corporation (LLC)

Authorized by state statutes, LLCs are a popular business structure because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Otherwise, LLCs are more like a partnership or sole proprietorship in management flexibility and the benefit of pass-through taxation.

Limited Partnership (LP)

An agreement by two or more partners to operate a business jointly in which one or more of the partners, the “limited” partner, is liable for debts or losses of the LP only to the extent of its ownership equity. Limited partners have no managerial control and do not receive dividends; however, they have direct access to cash flow from earnings.

Trust

Trusts are fiduciary relationships in which a trustor grants a trustee the right to hold title to specific assets or property for the benefit of a third-party beneficiary. For example, funds from your CamaPlan account could be placed in a trust held for the benefit of your heir.

Corporation (S-Corp prohibited)

Each state registers corporations as a separate legal entity with rights, privileges, and liabilities separate from its shareholders. Corporations offer shareholders limited liability. Should a corporation fail, shareholders probably lose their equity and employees probably lose their jobs, but neither is liable for debts incurred by the corporation.

Joint Venture

Your CamaPlan account can agree to develop, with one or more joint venture partners, for a finite period, a business entity with assets contributed by each equity partner. The joint venture partners control and manage the enterprise and split all revenues, expenses, and assets according to the respective ownership percentages.

Investment Club

Structured Settlement

A financial agreement or insurance annuity agreed to by a claimant to resolve a personal injury tort claim or an obligor to compromise a statutory periodic payment obligation. A well-known structured settlement occurs when a lottery winner agrees to accept payments over 20 years. An investment market exists buying the remaining payments – at a discount – in a structured settlement.

Checkbook LLC

Refers to an LLC created and managed by the CamaPlan accountholder into which account funds are invested. As manager, the accountholder can make investment decisions quickly – by simply writing a check from the LLC’s checkbook. The strategy eliminates or reduces custodian transaction fees, paperwork, and processing delays. Any profits earned by the LLC pass through to the CamaPlan account with the same tax treatment.

Title and Vesting Instructions

All contracts and documents related to a private placement must adhere to these guidelines:

Owner’s Name

Documents should note the ownership interest is held in the name: “CAMA SDIRA LLC FBO [ YOUR NAME ] IRA”.

Owner’s Address

The owner’s address that should be listed on all documents as:

122 East Butler Ave, Suite 100
Ambler, PA 19002

Income

Documents should instruct that all distributions of income by the business venture accruing to account are to be issued in the above owner’s name and delivered to the above owner’s address for deposit in your CamaPlan account.

Signature

Because title to the ownership shares is held in CamaPlan’s name (above) for your benefit, only authorized employees of CamaPlan can legally execute the private placement for your account. Documents must be mailed, faxed, or delivered to our offices sufficiently in advance of the desired transaction date for our review and signature before their return to the offerer. Also, CamaPlan will not sign any document until your signature indicates that you have “read and approved” it.  Thus, each document must include a statement to that effect and your signature thereto.

There is one exception – because we do not need to review due diligence paperwork, they do not require our signature.

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