Adam Bergman

Founder, Tax Lawyer, Author

Yes, you can invest in a private company before it goes public through your IRA, and it’s been legal the entire time. When SpaceX went public in June 2026 at a valuation near $1.8 trillion, the largest IPO in U.S. history, most investors were only seeing the opportunity for the first time. Some retirement investors had already been in the company for years, using a Self-Directed IRA to buy shares long before Wall Street ever got a chance.

What the SpaceX IPO Actually Proved

SpaceX didn’t become a nearly $2 trillion company on the day it rang the opening bell. It became one over the two decades before that, through private financing rounds that took it from a startup with an improbable idea to one of the most valuable businesses on earth. The IPO didn’t create that value. It just gave public investors their first chance to buy in, after the majority of the appreciation had already happened.

That pattern isn’t unique to SpaceX. When Google went public in 2004, it was valued at roughly $23 billion. Alphabet is worth over $4 trillion today, which sounds like public shareholders did extremely well, and they did. But Google’s founders, employees, and early venture investors captured a far larger multiple, because they got in before the public markets ever had the chance.

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Why Today’s Biggest Companies Stay Private Longer

Twenty years ago, companies like Microsoft and Amazon went public while they still had most of their growth ahead of them, largely because they needed Wall Street’s capital to keep expanding. That’s no longer true. Venture capital funds, private equity, sovereign wealth funds, and family offices now have enough capital to fund a company for years without ever touching the public markets. Stripe, Databricks, and Canva have all reached massive valuations while staying private far longer than a prior generation of companies would have.

The practical effect for retirement investors is that a growing share of the best wealth creation now happens before a single share trades on an exchange.

The Tax Code Never Stopped You From Investing Pre-IPO

Most investors assume a brokerage IRA can’t hold private stock because the IRS won’t allow it. That’s not accurate. Outside of a narrow list, life insurance contracts, collectibles under IRC Section 408(m), and S-corporation stock, an IRA can invest in almost anything, including shares in a private company, provided the deal doesn’t run afoul of the prohibited transaction rules under IRC Section 4975. Those rules exist to stop an IRA owner from personally benefiting from the account or dealing with a disqualified person. They were never written to keep IRAs out of private markets.

The real reason most brokerage firms never offered this isn’t the tax code. It’s economics. Private investments require subscription agreements, custom valuations, and ongoing administration that doesn’t fit a business built around trading public securities with the click of a button. A Self-Directed IRA custodian is built specifically to handle that administration, which is the actual gap between what the law allows and what most retirement accounts can access.

Why a Self-Directed Roth IRA Is Built for This

Most investments grow steadily. A pre-IPO stake in the right company doesn’t. It has the potential to grow in multiples rather than percentages, and that changes which account you want holding it.

Say your Roth IRA puts $50,000 into a private company that eventually becomes the next SpaceX and that stake grows to $2 million. Once you’ve met the five-year holding period and reached 59½, every dollar of that $1.95 million gain comes out with no federal income tax owed. In a Traditional IRA, that same gain gets taxed as ordinary income the day you withdraw it.

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• Find out which current private offerings and secondary market deals are open to Self-Directed IRA investors
• Get a straight answer on whether a Roth conversion makes sense before you make a pre-IPO investment
• Confirm a specific company is actually eligible for IRA ownership before you wire any money

What to Know Before You Invest

A Self-Directed IRA doesn’t make a bad investment good. Most startups fail, private shares are illiquid, and some offerings require you to meet accredited investor standards before you can participate. Due diligence on management, financials, and the competitive landscape matters just as much here as it would with your own money. One structural detail worth knowing: if a private company is organized as an S-corporation, your IRA can’t hold that stock at all, since IRAs aren’t eligible S-corp shareholders. Most VC-backed companies are C-corporations, so this rarely comes up with startup investing specifically, but it’s worth confirming on any deal.

We’ve spent more than 15 years helping investors put retirement funds into exactly this kind of opportunity, and a meaningful number of IRA Financial clients held SpaceX inside their Self-Directed IRAs, many of them Roth accounts, years before the IPO. Those accounts are now sitting on substantial tax-advantaged gains that a traditional brokerage IRA simply never would have made available to them.

Frequently Asked Questions

Can my IRA legally buy stock in a private company before it goes public?
Yes. The IRS doesn’t prohibit it. The main restrictions are life insurance, collectibles, and S-corporation stock, along with the standard prohibited transaction rules under IRC 4975.

Why doesn’t my brokerage offer pre-IPO investing through my IRA?
Most brokerage IRAs are built around publicly traded securities because that’s where their business model works. A Self-Directed IRA custodian is set up specifically to administer private investments.

Is a Roth IRA or Traditional IRA better for pre-IPO investing?
A Roth IRA is generally the stronger fit, since a large gain from a successful private investment can come out completely tax-free once you meet the Roth qualification rules, instead of being taxed as ordinary income later.space

What happens if the private company fails?
You lose the investment, the same as you would outside a retirement account. A Self-Directed IRA doesn’t reduce investment risk, it only changes how a successful investment gets taxed.

Final Thoughts

Nobody knows what the next SpaceX will be, or what industry it comes from. What’s clear is that the biggest gains increasingly happen while a company is still private, before the public markets ever get a look. The question worth asking isn’t whether another company like SpaceX is out there. It’s whether your retirement account is set up to get in before it goes public, not after.

This content is for educational purposes only and does not constitute legal, tax, or investment advice. Consult a qualified professional before making any investment decisions.