Using SDIRA for Commercial Office

[Greg Sonnier]

Would this be a prohibited transaction- Let's say I purchase a commercial office building with my SDIRA and lease that property to my full time employer. I am in outside sales and may use the office sometimes. Am I personally benefitting by using it and is this a prohibited transaction by using the office?

[Brian Eastman]

@Greg Sonnier & @Eric M.

Actually, that may be allowed.  

There are two concerns:

• Is the party you are leasing to a disqualified party
• is there any direct or indirect benefit to you or a disqualified party to the plan

The company you work for would be disqualified to your plan if you or your lineal family have a controlling interest - either via greater than 49% equity or executive level decision making control over the business.  It does not sound on the surface as if that is the case.  

Whether there is any direct or indirect benefit to you is a bit more questionable.  If, for example, you pay a desk fee to the corporation and that is coming back to your plan, that might be an issue.  Similarly, if your willingness to lease property to the company bought you special consideration such as a promotion, raise, etc., the IRS may have issue with the transaction.  A situation where your willingness to provide capital to a business earns you a job with that company would also be considered an indirect benefit, but if you have been working for the employer for some time that is not going to be an issue.

The bottom lines is that if there is no real or perceived linkage between your retirement plan leasing to your employer and your work status with that employer, this could be OK.

We have many cases where someone who is a rank-and-file employee of a company will have an opportunity to buy a small stake in the company, lend to the company, or lease property to the company using retirement funds.  It can be OK.