IRA to fund LLC

[Brent Mattison]

I have been contemplating using money from my IRA to fund an LLC and get started in multi family. I know I'll be taxed and pay penalty for early withdrawal, But I feel I can make up that money plus more with REI. I just wanted some feedback to see if I'm crazy to think this way. Thanks.

[Kelly N.]

I just talked to our investment adviser about this, he said we'd be taxed at our current rate plus a 10% penalty from the IRS on anything we withdraw from the IRA accounts. In my opinion, that money would cost too much to use- we'd be taking a roughly 43% hit on the withdrawal AND that money wouldn't be there for our retirement either.

I think you would be further ahead by using money from anywhere else you can, and have the IRA be part of your reserves- the bank want to see that you have 6 months PITI on any and all loans you have, they will count the money in the IRA (less the tax and penalty) but at least you don't have to use it.

We have tightened our belts and are putting everything possible toward another purchase.  We are selling toys, not going out to eat, not going on vacations, etc.

Good luck!

Kelly