Funding EB-5 with Your SDIRA: A Seamless Path with the Right Custodian

For many H-1B professionals and other foreign nationals already working in the United States, the biggest hurdle to pursuing an EB-5 green card isn’t desire—it’s liquidity. A large portion of personal wealth often sits in U.S. retirement accounts like 401Ks and IRAs that are tax-deferred. The good news: with proper structuring, those tax-advantaged dollars can be deployed into an EB-5 regional center project—such as a rural, TEA-qualified offering at the $800,000 threshold—using a self-directed IRA (SDIRA) with a specialized custodian like Alto.

How Does This Work?

EB-5 requirements focus on the immigrant’s investment of lawfully obtained capital and job creation; the statute does not forbid retirement funds as a lawful source, so long as the funds are traceable and properly documented. Multiple EB-5 practitioners confirm that retirement funds (IRA/401 K) may fund an EB-5 investment when handled correctly, either via distribution or through an SDIRA structure.

What is the Role of a Custodian for Your SDIRA?

SDIRA custodian companies help safekeep assets, processes transactions at your direction, and handles tax reporting. They do not give investment advice; you (and your advisors) choose the private placement (like an EB-5 limited partnership or note) and direct your SDIRA custodian to subscribe on behalf of your IRA. That’s the core of a self-directed IRA: you control the investment menu beyond the typical stocks and mutual funds.

“The SDIRA is simply the wrapper.” Said Niral Patel, immigration attorney at KLDP LLP.“It's the investor's lawful W-2 income that was previously deposited in another retirement account, whether that's an individual IRA or 401K plan. By properly rolling it over to a SDIRA account, we keep the tax-advantaged nature of the funds while allowing investors to fund their EB-5 investments. Otherwise, as long as the investor’s funds are lawfully sourced and the investment is structured to meet EB-5 requirements. -- amount, ‘at-risk’ capital, and job creation -- the immigration analysis is the same.”

How to Use an SDIRA to Invest in the Waldorf Astoria Hill Country (Rural EB-5)

1. Open or roll over to an IRA: Investors open an IRA (Traditional or Roth). Many roll over existing 401(k) or IRA balances into your selected custodian company via trustee-to-trustee transfer—typically a non-taxable event—so the funds remain in tax-advantaged status.
2. Direct the investment: The investor instructs the custodian to subscribe—on behalf of the IRA—to the EB-5 offering documents (for example a limited partnership interest in the regional center project). The company processes the paperwork and wires funds from the IRA to the project’s escrow or subscription account per the offering.
3. File the EB-5 petition: The investor’s I-526E shows the SDIRA transaction, source-of-funds path, and compliance with the required investment amount—$800,000 for projects in a rural or other TEA, or $1,050,000 otherwise. Under current rules, these amounts are fixed until automatic inflation adjustments starting January 1, 2027.
4. Hold period and exit: When the EB-5 investment returns capital—often around year 5 in many structures—the proceeds flow back to the IRA, preserving tax deferral (Traditional) or Roth treatment (if applicable), subject to normal retirement account rules.

“Using an SDIRA can be elegant from a tax perspective because gains and income accrue within the retirement account tax-free.” Said Geoff Weg of The Weg Law Group. “You’re aligning immigration objectives with long-term, tax-advantaged savings.”

Why an SDIRA Can Save You Money

It’s pre-tax money at work. For Traditional IRAs and pre-tax rollovers, you’re deploying dollars that haven’t yet been taxed. Instead of taking a distribution today (and paying ordinary income tax, plus possible penalties), the SDIRA invests directly, keeping tax deferral intact while you pursue permanent residency. The compounding occurs inside the IRA until a future distribution, per normal retirement rules. This is a clean source-of-funds trail. Retirement accounts are heavily documented and regulated, making it straightforward to evidence lawful source and path of funds—key elements of EB-5 adjudications. It offers operational simplicity. A custodian handles the administrative plumbing—accounting for the asset, sending wires per your direction, and issuing the appropriate tax forms—so your counsel can focus on immigration, securities, and tax structuring.

“As EB-5 investments evolve, more investors explore creative ways to unlock capital, including through self-directed retirement accounts.” Said Divij Kishore, founding attorney at Flagship Law. “When structured carefully – with a reputable SDIRA custodian and a transparent, well-documented regional center offering – this can be a powerful tool. The key is ensuring that innovation does not come at the expense of compliance or investor protection.”

Practical Considerations (and Risks) to Get Right

• Prohibited transactions & disqualified persons: SDIRAs have strict IRS rules: you can’t personally use or benefit from IRA-owned assets, and you must avoid transactions with disqualified persons. A competent tax lawyer should vet the structure. (Note: SDIRA custodians don’t give investment advice.)
• Due diligence: Private placements require careful review of offering documents, business plans, job-creation methodology, escrow terms, and exit mechanics. Immigration attorneys typically don’t give investment advice—consider a registered investment adviser and securities counsel.
• EB-5 requirements: Your capital must be at risk for the purpose of generating a return and tied to job creation thresholds. The rural/TEA benefit is the $800,000 minimum—verify the project’s designation and job cushion.
• Regulatory updates: EB-5 rules have evolved under the Reform and Integrity Act; always confirm current requirements and processing categories before filing.

The Bottom Line for EB-5

For H-1B holders and other U.S.-based professionals with significant retirement balances, a SDIRA may be a powerful way to pursue an $800,000 rural EB-5 investment without triggering immediate taxes. The strategy leverages pre-tax dollars, simplifies source-of-funds documentation, and routes eventual returns back into your retirement account—aligning immigration goals with long-term wealth planning. With the right team—immigration counsel, tax counsel, and a securities lawyer—you may make the process both compliant and efficient.