Use Self Directed IRA to fund part of existing LLC

[Laura McPhail]

Hi there, I'm looking for ways I can get additional funds for a down payment on our first investment property. We have money in savings, but I'd like to draw from that as little as possible. My husband and I are 2 members (of 4) of an LLC (in Arizona) that will be used to purchase real estate investment properties. We would like to roll his company 401k over to a self-directed IRA and use that for down payment funds. What would be the best way to go about that? Would the IRA need to be a member of the LLC, or can we pay our portion of the down payment directly through the IRA at COE?

Thanks for any advise you can provide! :)

[Dmitriy Fomichenko]

Laura that is correct, you can't commingle you IRA and personal funds.

Jason, lending from an IRA to an LLC where Laura and her husband are members will be considered prohibited transaction. IRS rules are very clear: disqualified person is not allowed to receive any direct or indirect benefit from his IRA. Getting loan from an IRA to the LLC where they are members will benefit them. Please refrain from making recommendation which will result someone's IRA disqualified if you don't understand the rules.

Laura, there is a lot of misinformation on this topic online so be careful who you listen to.