Congress is inching closer to passing a budget reconciliation bill that will threaten the future of our movement for democratic, community-owned capital. Buried in nearly 1,000 pages of text are two tax provisions that received almost no vetting: Sections 138312 and 138314 of the Build Back Better Act will limit the ability for grassroots investors to use self-directed IRAs and related vehicles to invest their retirement funds into community capital projects.

We need you to contact your representatives immediately to oppose these provisions. You can also sign NC3’s petition to show your support. 

This piece by Mat Sorensen details how these provisions may impact your investment options. 

The provisions are apparently intended to curb efforts by the ultra-wealthy to shield their wealth, by prohibiting investments by self-directed IRAs in offerings that are limited to accredited investors. However, the bill would also prohibit IRA investments into community capital offerings that impose suitability standards. That includes virtually all Direct Public Offerings in many states and Regulation Crowdfunding offerings nationwide. 

For millions of Americans, nearly all of their investable assets are held in their retirement accounts. These two tax provisions would effectively forbid them from investing locally or in alignment with their values.

Thank you for your support to protect our movement for a fairer economy!

Here are more details from Mat Sorensen on what to say to your representatives and senators:

Ask them to save your IRA and to oppose Sections 138312 and 138314 in the Build Back Better Act as those provisions take away investment choices for your IRA. It is critical that you let them know the following:

• That you are their constituent. Give your address or leave your City and State so they know they represent you (e.g. I’m Sally Jones from Glendale, AZ).
• There is a misconception in Congress that self-directed IRAs are only something the wealthy do and that this only hurts the wealthy. It’s helpful to be straightforward about who you are and about the size of your account. They need to know that this bill is going to disproportionately hurt IRA savers with IRAs less than $1M. Here are some examples but it may help to put it into your own words and situation explaining how you’re not an ultra-wealthy person using their IRA to invest in hedge funds (that’s what they presume).
  • I’m a working American with a $X IRA just trying to get to an account balance I can retire on. Sections 138312 and 138314 in the House Tax Bill will harm my IRA and my ability to grow a retirement account that I can actually retire and live on.
  • I’m a pilot, nurse, retired firefighter, realtor, etc. (insert profession or job so Congress doesn’t think this is just CEOs, doctors, lawyers, and wealthy heirs), and I have diligently contributed to my retirement account. I choose to invest some of my IRA into real estate, small businesses, start-ups, and crowdfunding offerings. These provisions will force me to sell my assets prematurely for a loss or will force me to distribute them where I will be subject to taxes and penalties. Please oppose Sections 138312 and 138314 as they will cause drastic tax consequences for my IRA and they will take away future investment choices in my IRA that are important to growing my account to an amount I can retire on.
  • If you think the $10M cap is reasonable, say that so that Congress doesn’t assume you’re an ultra-rich person with a $10M plus IRA (like some in Congress presume anyone opposing this bill is). We’re not opposing the $10M cap in our efforts as it affects very few account holders who self-direct.