Celebrating Another USCIS Approval: Self-Directed IRAs Change the EB-5 landscape

What is the Self-Directed IRA Rollover?

Retirement funds like a Traditional 401(k) or a Roth 401(k) carry significant protection from taxes as long as certain conditions are met.  With USCIS approvals now in-hand, an EB-5 investor can confidently rollover these funds without taxation into a Self Directed IRA custodial brokerage like Alto IRA and their capital contribution can be part of the minimum investment of $800,000 dollars.

What Does a USCIS Approval Mean for an EB-5 Investor?

Simply put, it is peace of mind. This is critical to EB-5 decision making, especially when retirement accounts are used.  EB-5 Investors need to consider all risks from various perspectives, and careful USCIS approvals confirm that there are no USCIS compliance risks with this strategy.

For many investors, the EB-5 Immigrant Investor Program is a valuable opportunity to achieve U.S. residency by investing in qualified projects. However, one of the biggest challenges has always been sourcing the necessary funds. Behring’s approaches, all confirmed by USCIS approvals, include the option to use Self-Directed IRAs.  This advancement allows investors to leverage their existing retirement savings without facing early withdrawal penalties, tax free. This certified path of funds strategy is officially recognized as a lawful source for EB-5 investments, offering flexibility, tax efficiency and security.

This affirmation continues a litany of market-leading approvals thanks to the trailblazing work of Phuong Le and Niral Patel of KLDP LLP.  With their help, USCIS previously approved our multiple-fund EB-5 offering as part of a diversified, multiple-asset portfolio, the only placement of its kind in the EB-5 market that also offers different investment options.

Also, thanks to KLDP, USCIS recently approved the use of the Unity Lender, an unsecured loan platform as a lawful source of funds, and now we are excited to confirm the SDIRA rollover has full clearance from the Immigrant Investor Program Office, the compliance safeguard of the EB-5 program at USCIS Headquarters in Washington, DC.

Behring Regional Center and KLDP brought these innovations to the market along with partial capital contributions, offering a robust selection of USCIS approved EB-5 financing strategies.

How Does this Compare to a Retirement Account Loan or Liquidation?

Consider an example where the EB-5 applicant has $150,000 in a Self-Directed IRA from a previous employer.

Column 1: Retirement account loan.

Retirement account loans are typically restricted to $50,000.  This means $100,000 cannot be used, and the $50,000 loan could have a debt service of $25,000 over five years. This scenario is inefficient.

Column 2: Retirement account liquidation.

Liquidating a retirement account before meeting IRS timelines will trigger income taxes on earnings as well as penalties.  In this hypothetical scenario, the investor would be giving away about half of their earnings.  This unlocks more than $50,000 but is inefficient.

Column 3: Behring’s Rollover.

A rollover to a new brokerage is not a taxable event.  All $150,000 can be used toward the minimum investment of $800,000.  The capital is returned to that account and maintains tax protection, whether Roth or Traditionally funded.

This is pure efficiency, and USCIS approved.  No taxes, no penalties, no debt service.

All of the steps we have taken to shape the industry were forged with a long history with KLDP, LLP – who continue to rise to the challenge with a demonstration of unmatched EB-5 acumen.  In our ten years of experience as a Regional Center, every innovative strategy has been approved by USCIS.

You can learn more about using Self Directed Individual Retirement Accounts here and if you are interested in leveraging our market shaping strategies for your family, set up a call to speak with the best team in the EB-5 industry.