Private Equity Investing Now Allowed in 401(k) Retirement Funds

Can we now subject large &quot;private&quot; firms to the same scrutiny that &quot;public&quot; have to obey? I always thought it was ridiculous that you could call a trillion dollar company with millions of shareholder, &quot;private.&quot;<p>From the sounds of it, this ruling handwaves away the inherent risk of investing in a company whose finances you have no visibility into by claiming that putting it into a diversified private fund is the same as a diversified public fund. Which is fine, but they should be subject to the same reporting requirements as public companies.<p>These regulations didn&#x27;t appear out of thin air. The business world is full of evil people looking to rob everyday investors. See: Enron.

Private equity isn&#x27;t an appropriate asset class for 401(k)&#x27;s. Public markets have a threshold for rules&#x2F;regulations and reporting requirements.<p>You don&#x27;t want your retirement account to be a casino. You want companies that can provide stable, long-term growth of your portfolio-- so the money&#x27;s there when you need it.

Didnt Mitt Romney shield a fortune from taxes by wrapping Bain Inc deals inside IRAs? Sounds kind of similar.

Can someone set up a &quot;professionally managed fund&quot; where you can set up an LLC, have the fund invest your 401k in that LLC, pay yourself a salary equal to the amount invested? Bypassing early withdrawal fees for some nominal fee?

Don&#x27;t many (most?) private equity funds have very very long horizons, like 10 years? And perhaps that&#x27;s a mitigating factor to the opaqueness?

For those against -- do you really prefer that only well-connected billionaires are allowed to invest in startups, and actually capture the rapid growth?<p>Most unicorns (and no, they aren&#x27;t all scams -- many are pretty stable, or exited successfully, a la LinkedIn, Salesforce, etc) were private until they were worth tens of billions. Any gains post-IPO are small multiples of the original investment.<p>The only people able to invest, and actually capture that growth, were already wildly wealthy. Do you think that&#x27;s fair?

I&#x27;d buy SpaceX stock, if Elon would allow.

I can&#x27;t buy OTM options expiring tomorrow in my 401k and somehow PE is allowed?

Sigh. Just another avenue for wealth transfer. Thanks Trump!

This opens up some excellent tax avoidance strategies.<p>I&#x27;m assuming this is available also for IRA and Roth IRA. What you do is setup two transactions: One that will lose money in the IRA, and the other that will gain in the Roth IRA. (A straddle.) Make sure you execute both at the same time (if it&#x27;s a thinly traded security you can end up trading with yourself, but that&#x27;s not necessary).<p>Then sell, and do it again.<p>You effectively move money from IRA to Roth IRA. (And yes it&#x27;s legal, I contacted the IRS and asked.)<p>In the open market you can only move a small percent at a time, but with private equity the gains and losses are much greater and you can effectively move all your money.