Bloomberg news reported today that a California film producer says that retirement money (through a Self-Directed IRA) may provide individuals the opportunity to ”play movie mogul!”

Unified Pictures founder and producer Keith Kjarval is seeking funds from Individual Retirement Accounts to help finance his productions, including the soon-to-be released “J-23” and the pre-production “55 Holly Star.”

Kjarval says he’s offering an alternative for people dissatisfied with traditional investment returns such as stock orbond mutual funds. Self-directed IRAs have been used to fund new businesses, invest in real estate, commodities, and now even a small piece of Hollywood.

The IRA option “makes it more attractive for people once they’ve made the decision,” said Kjarval, 34, whose company is based in Northridge, California. “It opens up an entirely different door to them.”

Not following the rules for self-directed IRAs can result in an immediate 10 percent penalty, plus taxes on the amount withdrawn. Consequently, you need to find a custodian familiar with self-directed IRAs to handle the paperwork and manage the funds. That helps avoid the biggest pitfall, “self-dealing,” or using the investment in some way that gives you a short-term benefit.

The U.S. Internal Revenue Service rules are designed to encourage and protect long-term investments. If you use a portion of an IRA in a prohibited transaction such as investing in collectables and life-insurance contracts, the IRS will treat the violation as a premature IRA withdrawal, meaning your entire IRA

Kjarval says he’s upfront about the risks facing potential investors. He says many backers typically have more than $10 million of assets and many, but not all, know the movie business.“J-23” was one-quarter financed with retirement money. Unified has three films in production and three have been completed and
licensed overseas, according to Kjarval. One of the films has been released in the U.S. The producer says he’s preparing reports on how the films have done as investments.

Stay tuned…..