SD-IRA Waterfall Calculator — Distribution Mode Comparison

Inputs

Capital & Pref

Initial Capital ($) $250,000

Preferred Return Rate 15.0%

Daily compounded, profit-dependent

Hold Period & MOIC

Hold Period (years) 5

MOIC Ceiling (Tier 3 cap) 2.90x

From matrix; auto-suggests by hold

Sub-Level Cash Flows (to Holdco)

Annual Operating Income (pre-tax) $200,000

Combined from all subs, flowing up to Holdco

Exit-Year Realization (additional) $1,500,000

Sub sale or enterprise exit at end of hold

Internal Bank Reinvestment Yield 12.0%

Annual return on Holdco-retained cash redeployed to next sub

Tax Assumptions

Combined Corp Tax Rate (Fed + CA) 28.0%

Quick-Set MOIC Ceiling

SD-IRA Total

—

— · — IRR

Operator Total

—

Holdco Corp Tax

—

Federal + CA, paid annually

SD-IRA Tax Cost

UBTI blocked by C-corp

Investor Waterfall — Final Allocation

Year-by-Year Fund Flow

All Three Modes Side-by-Side (current inputs)

Reading the Numbers

Pay-As-You-Go stops the pref clock early. Pref balance never compounds beyond 1 year of accrual. Lower total to investor, faster cash to investor.
Internal Bank lets pref compound for full hold period. Investor balance grows at e^(rate × years). Holdco redeploys retained cash into next venture (Tavern → Fix-and-Flip → Construction).
Hybrid pays current pref to slow compounding, retains capital + MOIC layers for redeployment. Operator-friendly because it caps catch-up exposure.
Tension: If reinvestment yield exceeds pref rate, retention helps the operator (compounds value faster than pref obligation). If pref rate exceeds yield, paying current is cheaper.
SD-IRA tax outcome: $0 across all three modes. C-corp blocker holds. Difference is dollar amount delivered to IRA, not the tax treatment of it.

Illustrative model. Pref accrual uses continuous (daily) compounding approximation: balance × e^(rate × years). Corp tax applied to operating income annually whether retained or distributed. Internal-bank reinvestment yield applied to Holdco's after-tax retained cash, compounded annually until exit. All distributions to SD-IRA are dividends or stock redemption proceeds excluded from UBTI under §512(b)(1) or §512(b)(5). Model assumes no §512(b)(13) breach (IRA stays under 50% ownership). Not a legal or tax opinion. For client illustration only.