SDIRA/SD401k... Loopholes to Fund Disqualified Persons?

[Amanda Musumeci Deeter]

Hello!

My husband's father has funds in his retirement account that he'd love to invest in our REI business. He's willing to move his current IRA into an SD account so to have checkbook capacity, however, we found that since we are his children that he is unable to lend/co-invest with us(disqualified persons). The only other solution we thought of was him borrowing from his retirement accounts and allowing us to use his funds at whatever rate he is charged. But that limits us as he is capped in how much he can borrow.

Are there any loopholes that anyone knows of for getting around the disqualified persons rule? Perhaps use of LLCs, S/C-corps, Land Trusts? I've recently heard of ROBS... but do not fully understand how and if that might work for us. Would love any feedback from more knowledgeable sources! Thank you!

[Brian Eastman]

@Amanda Musumeci Deeter

There are no loopholes. As lineal family, you are poision to your father in-law's IRA.

No entity structure will mask any transaction between his retirement plan and you, and any such transaction would void his IRA.

The ROBS program would allow him to create his own retirement-funded real estate development company or participate in such a company with you, but he would have to be actively engaged in the business and this option is not suited for passive investing - just things like new home development or flipping for immediate sale.