Does non-recourse in an IRA require a W-2

[Henri Meli]

Hopefully this is the right forum.

Does anyone know if a non-recourse loan within an IRA requires a W-2 (proof of employment)? Since the loan is entirely secured by the collateral, will the financial institution still require it.

[Brian Eastman]

@Henri Meli

The answer I provided above still holds. You as the investor cannot pledge a personal guarantee on any debt instrument under the umbrella of the IRA. As such, your income and debt-to-income, etc. do not really factor into the lender's underwriting.

This is true whether you simply establish a self-directed IRA with a custodian for investing in real estate or work with a firm to establish a checkbook IRA LLC as you describe. In the IRA LLC, the IRA is the sole member and responsible party of the LLC, so the LLC is just an extension of the IRA in most senses. The IRA is still ultimately the borrower on the note.