I work for a startup company, and they are about to go through their FMV evaluation and funding round, at which I will be granted my options. I have talked to them and told them that I would like the ability to have my options purchased by a self directed IRA and they said let them know what they need to do and will work with me. I am been going through logistics of how to do this without violating self dealing rules. I am aware that I cannot be given ISO options as those can go to an employee only, and my IRA would not be an employee. One way for sure I can get my portion in the IRA is if they would just allow me to participate in the funding round for the amount I would be granted, in essence let me purchase my shares now just as if I was an investor. Then as long as I stay under 50% ownership (not a problem I will be .6%) and I am not deriving any benefit from the purchase (such as guaranteed compensation, position or employment contingent) then I am fine.

That however would require my company to not have vesting on my shares. Also it would require me to pay for the shares immediately. What about NSO options? Those can be granted to non employees. Can the NSO options have a vesting period also? Can that vesting be tied to my employment? I am not deriving a benefit by that tie, it is the reverse, my IRA is deriving an opportunity of my employment. Also I say IRA above, it will be a Roth IRA, but the logistics are the same from my understanding.

Thanks! Michael

I work for a startup company. They are about to go through their FMV evaluation and funding round, at which point I will be granted my options.

I talked to them and said I would like the ability to have my options purchased by a self-directed IRA. They said to let them know what they need to do, and will work with me.

I have been going through the logistics of how to do this without violating self dealing rules. I am aware that I cannot be given ISO options, as those can go to an employee only, and my IRA would not be an employee.

One way for sure that I can get my portion into the IRA is if they would just allow me to participate in the funding round for the amount I would be granted, in essence let me purchase my shares now just as if I was an investor. Then, as long as I stay under 50% ownership (not a problem since I will be ~0.6%), and I am not deriving any benefit from the purchase (such as guaranteed compensation, position or employment contingent) then I am fine.

That, however, would require my company to not have vesting on my shares. Also, it would require me to pay for the shares immediately.

What about NSO options? Those can be granted to non-employees. Can NSO options have a vesting period also? Can that vesting be tied to my employment? I am not deriving a benefit by that type — rather, it is the reverse: my IRA is deriving an opportunity of my employment.

(While I say IRA above, it will be a Roth IRA, but the logistics are the same from my understanding.)