Investing with a Self-Directed IRA for Impact—Without Losing Your Shirt
A Practical Guide to Using Retirement Dollars for Purpose-Driven Investing
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Today on SuperCrowdHour, I’m digging into one of the most requested—and most misunderstood—topics in impact investing: using a self-directed IRA to back the entrepreneurs, communities, and causes you care about while building your own financial future.
Our live SuperCrowdHour webinar begins today at noon ET / 9:00 AM PT, with a VIP small-group discussion starting at 1:00 PM ET / 10:00 AM PT.
If you’re reading this before the top of the hour, you can join us live. If you’re reading it later, the replay will be available shortly in the video player at the top of this post. Either way, I want this newsletter to stand on its own so you don’t have to attend to get value—but if you want practical, personalized insight, you’ll get that by joining us live, and especially in the VIP discussion.
Why Talk About Self-Directed IRAs at All?
You and I both care about impact. We want to:
Help entrepreneurs who are changing the world
Support communities that Wall Street ignores
Build our own financial resilience so we can keep doing good for decades
Retirement accounts are one of the biggest pools of capital most of us ever control. For many people, their 401(k) or IRA is the primary financial asset in their lives. It’s natural to ask:
“Can I use my retirement money to invest in impact crowdfunding—and is that actually smart?”
The short answer is: sometimes yes, sometimes definitely not. Today’s webinar—starting soon at noon ET / 9:00 AM PT—is all about helping you know the difference.
This post will give you the core framework. The live session and VIP group are where we’ll apply it to real-life situations.
Quick Refresher: Traditional vs. Roth
Before we get too far, remember there are two basic tax flavors of retirement accounts:
Traditional (401(k), 403(b), IRA, self-directed IRA):
You usually get a tax deduction when you contribute.
Your investments grow tax-deferred.
When you withdraw in retirement, you pay ordinary income tax.
Roth (Roth 401(k), Roth IRA, Roth self-directed IRA):
No deduction when you contribute.
Investments grow tax-free.
Qualified withdrawals in retirement are never taxed.
Both traditional and Roth structures can be used in self-directed IRAs. The “self-directed” part is about what you can invest in, not how it’s taxed.
What Makes a Self-Directed IRA Different?
With a standard IRA or 401(k) at a big firm like Fidelity or Schwab, you’re typically limited to publicly traded securities: stocks, bonds, mutual funds, ETFs.
A self-directed IRA:
Is held by a specialized custodian (not a typical broker-dealer).
Allows you to invest in alternative assets:
Impact crowdfunding offerings
Private companies
Real estate
And more
That sounds empowering—and it can be. But there are three big realities I’ll cover both here and in more depth during SuperCrowdHour today at noon ET / 9:00 AM PT:
Complexity can quietly eat your returns.
Fees can quietly eat your returns.
In many cases, you don’t actually need an IRA to get favorable tax treatment.
Let’s unpack those.
The Fee Trap: My Own Painful Lessons
In Chapter 10 of How to Make Money with Impact Crowdfunding, I share two true stories from my own experience with self-directed IRA custodians:
Custodian #1:
The CEO went to prison for stealing from investors. That was the good outcome, believe it or not.Custodian #2:
The firm was “legitimate,” but the fees were so high that they ended up costing me more than the first custodian literally stole.
Self-directed custodians usually can’t earn money the way brokers do (with spreads, internal funds, and order flow), so they often charge a fee for everything:
Opening or funding the account
Each additional deposit
Distributions to you in retirement
Investment transactions out to crowdfunding portals
Payments coming back from those portals (loan payments, dividends, redemptions)
Annual account fees
Online access fees
Fees for paper vs. digital statements
If you don’t ask about each of these fee types individually, you can easily wind up in a situation where:
The taxes you save are smaller than the fees you pay.
That’s not clever tax planning; that’s a trap.
In the webinar beginning today at noon ET / 9:00 AM PT, I’ll walk through a simple checklist of questions to ask any self-directed custodian before you move a single dollar. In the VIP small-group discussion at 1:00 PM ET / 10:00 AM PT, we’ll talk through specific fee scenarios participants are facing right now.
Why You Don’t Always Want Tax-Deferred Equity in an IRA
Here’s a counterintuitive truth:
For equity-style impact investments, putting them in a self-directed IRA can sometimes increase your lifetime tax bill.
Why?
Equity crowdfunding investments typically generate long-term capital gains when they succeed.
Long-term capital gains are already taxed at lower rates than ordinary income for most people.
You only pay capital gains tax when you sell—which means your gains are already inherently tax-deferred.
If you hold those same gains inside a traditional IRA, when you take money out later, it’s taxed at your ordinary income rate, not the favorable capital gains rate.
In some cases, that means:
You avoid paying, say, 15% or 20% capital gains tax now…
Only to pay, say, 24% or more ordinary income tax later.
Not a great trade.
In the live session today at noon ET / 9:00 AM PT, I’ll show simple scenarios where keeping your equity impact investments outside of an IRA is actually more tax-efficient—especially for modest investors who might pay low or even zero long-term capital gains tax.
The Yield Strategy: When the Math Can Work
Where self-directed IRAs can shine is with yield-based strategies:
You build a portfolio of, say, 20 crowdfunded loans.
The portfolio totals $100,000 and kicks off $8,000–$10,000 per year in interest.
That interest is taxed every year as ordinary income if you hold it outside of an IRA.
If your tax bracket is around 24%, that could mean $1,920–$2,400 in tax on that annual income.
In that kind of scenario, if you:
Already have at least $100,000 in retirement accounts,
Are committed to a meaningful allocation to this yield strategy, and
Choose a custodian whose total annual fees are lower than the taxes you’d otherwise pay…
Then a self-directed IRA can start to make sense.
In the VIP session today at 1:00 PM ET / 10:00 AM PT (registration required, $25; free for Impact Members), we’ll walk through:
What portfolio size makes the math work
Rough breakeven points for fees vs. avoided tax
How to think about risk, liquidity, and diversification in a yield-focused impact crowdfunding strategy
Early Withdrawals and the 34% Problem
Another big reason some people consider self-directed IRAs is that most of their investable assets are already locked up in retirement accounts.
If that’s you, and you’re under retirement age, taking an early distribution to invest outside your IRA can trigger:
Your ordinary income tax rate on the distribution
Plus a 10% early withdrawal penalty
If you’re in the 24% bracket and you pull out $100,000, that’s:
24% tax = $24,000
10% penalty = $10,000
Total hit: $34,000
In cases like that, opening a self-directed IRA and investing from inside the retirement wrapper may indeed be the least-bad option. You avoid the immediate 34% haircut and still get to do meaningful, values-aligned investing.
We’ll explore that trade-off during SuperCrowdHour today at noon ET / 9:00 AM PT, and we’ll leave plenty of time for Q&A.
Checkbook Control IRAs: Power and Peril
Some investors go one step further and create a “checkbook control” IRA structure:
You set up an LLC that is owned by your self-directed IRA.
With your custodian’s cooperation, you move cash from the IRA into that LLC.
You open a bank account in the LLC’s name.
From there, you write the checks:
Invest in crowdfunded offerings
Receive repayments and returns
Pay only modest bank fees, not per-transaction custodian fees
On paper, this can dramatically reduce the fee drag.
In practice, it introduces serious compliance risk:
The rules around prohibited transactions are complex.
You must avoid self-dealing: you can’t personally benefit from assets owned by your IRA.
You can’t pay yourself fees or use the IRA’s assets for personal purposes—not even temporarily.
It is very easy to make a mistake that causes the IRS to deem the entire IRA distributed—triggering taxes and penalties on the full amount.
In the webinar today at noon ET / 9:00 AM PT, I’ll outline when checkbook control might be worth considering and when you should absolutely steer clear. In the VIP small-group session at 1:00 PM ET / 10:00 AM PT, we’ll talk about what questions to ask your tax and legal advisors before going anywhere near that structure.
Start Simple: You Don’t Need a Self-Directed IRA to Begin
Here’s the most important takeaway if you’re new to impact crowdfunding:
You do not need a self-directed IRA to get started as an impact investor.
In fact, for most people:
It’s better to start small—say, with a $10 or $50 investment in an offering that excites you.
Learn the platforms.
Learn how deals are structured.
Learn how it feels to wait for updates and repayments.
Only after you’ve built familiarity and clarity around your strategy should you consider adding the complexity of a self-directed IRA.
Today’s SuperCrowdHour at noon ET / 9:00 AM PT is designed to help you:
Recognize when a self-directed IRA is actually a good idea
Spot predatory fee structures before you get trapped
Avoid tax “strategies” that work better for billionaires than for you
Align your retirement savings with your deepest values and impact goals
About the VIP Small-Group Session (1 ET / 10 PT)
Immediately after the main webinar, we’ll hold a VIP small-group session from 1:00–2:00 PM ET / 10:00–11:00 AM PT.
Attendance is limited to the first 10 people who register.
Registration is required, and there is a $25 fee.
Impact Members of the SuperCrowd attend free using their discount code (sent Monday evening and included in the header of every newsletter email to Impact Members).
In that VIP session, we’ll:
Talk through your specific situations (without giving individual tax or legal advice).
Sketch out decision frameworks you can take to your advisors.
Explore real examples of offer structures and custodial terms participants are actually seeing right now.
If you’ve ever thought, “I might want to use my retirement money for impact, but I’m scared of messing it up,” this is the room you want to be in.
How to Get the Most From Today
Here’s how I’d suggest approaching today’s content:
Read this post carefully.
Let it give you a solid foundation. If you never attend the webinar, you’ll still be better equipped than most investors dabbling in self-directed IRAs.Join the live SuperCrowdHour at noon ET / 9:00 AM PT if you can.
You’ll hear the material presented in a different way, with visuals and examples that build on what you’ve just read.Watch the replay later if you can’t attend live.
The video player at the top of this post will have the replay available shortly after the session.If this topic is especially relevant for you right now, grab a VIP seat at 1:00 PM ET / 10:00 AM PT.
If you’re an Impact Member, use your discount code (check Monday’s email or the header of any Impact Member newsletter).
If you’re not yet a member, the $25 fee may be the best risk-reduction investment you make all year.
My goal, as always, is to help you make money with impact crowdfunding in a way that’s practical, ethical, and sustainable—for you, your family, and the entrepreneurs you’re backing.
I hope I’ll see you live at noon ET / 9:00 AM PT, and maybe face-to-face (via Zoom) in the VIP discussion at 1:00 PM ET / 10:00 AM PT.
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If a location is not noted, the events below are virtual.
Superpowers for Good Live Pitch applications due by November 17. Apply to pitch at the Superpowers for Good live event on December 11, 2025. This is your chance to spark campaign momentum and present to expert investors who frequently invest in our winners. Applicants must have an active Regulation Crowdfunding offering live when applying that will still be live on the event date. Apply by November 17, 2025.
SuperCrowdHour, November 19, 2025, at 12:00 PM Eastern — Devin Thorpe, CEO and Founder of The Super Crowd, Inc., will lead a session on “Investing with a Self-Directed IRA.” In this session, Devin will explain how investors can use self-directed IRAs to participate in regulated investment crowdfunding while managing taxes and optimizing returns. He’ll break down when this strategy makes sense, how to choose the right custodian, and what fees, rules, and risks to watch for. With his trademark clarity and real-world experience, Devin will help you understand how to balance simplicity with smart tax planning—so you can invest confidently, align your portfolio with your values, and make your money work harder for both impact and income.
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