Advice on using funds from a SEP IRA to fund deals?

Question

Hi All,

I've seen some sporadic posts on this topic on the forums from time to time, but I am hoping to get some guidance on how to use funds from a SEP IRA to fund deals. I know this is undoubtedly a question for a CPA, but I am hoping that someone will see this post and will have gone through this process and can share some of the details of how it worked out. And it would be an added bonus if you have done this AND are a CPA and can tell me all the fun tax facts about how this type of transaction would work:)

Thanks all!

Tim

Basit Siddiqi · Answer

@Tim RobinsonYou may want to see if you can take a loan against your SEP IRA. Take out the loan, use the funds to invest in RE.If you want to invest within the SEP IRA, you should see if you have "self-directed" capabilities.

Tim Robinson · Answer

@Basit Siddiqi thanks for the input! I will look into my find to find out more about the self directed capabilities.

Tim Robinson · Answer

@Carl Fischer, thanks so much for your response! I will certainly send you a PM to learn more. I have a lot of questions:)

High level outlook, I do not have a particular deal in mind. I am looking for most likely a buy and hold SFH or small multi-unit. I am open to options on whether it makes any sense to take funds out of the account to put towards the deal , or to keep the funds in the SEP and have the SEP fund the purchase. I will certainly bring my CPA into the conversation but I am happy to hear there are ways to go about this. The bottom line is I would rather put the money I have in my SEP IRA into a real estate investment than have it sitting in the market as it currently is. Excited to explore ways to make this happen.

Carl Fischer · Answer

@Tim Robinson in order to best answer your questions, it would be helpful to have some information clarified. Do you currently have a SEP IRA? What kind of deals are you referring to? Do you plan to keep those funds in your SEP and have the SEP IRA buy the investment, or are you looking for ways to take funds out of a SEP to use personally for the deals in question (this would be non-tax sheltered)?

If you want to purchase the investment for the deal you have in mind with your IRA, you would have to open a self-directed SEP IRA with an IRS-approved third party administrator. BiggerPockets provides a list of self-directed IRA custodians for you to reference on this site, which you can view here. Things to consider when choosing a SDIRA custodian are customer service, knowledge, experience, and processing speeds. Many investors have found success through investing in alternative assets with their self-directed IRA. Real estate is one of the most common options; you can own residential, commercial, raw or improved land in your IRA. Once you find the custodian that is right for you, your IRA can make investments in alternative assets to grow your future retirement savings through ways that utilize your personal knowledge and expertise.

Of course, this is just one of the ways to go, but it all depends on how you plan on using your funds. You should always consult with your financial or tax advisor for tax-related questions. I would be happy to connect if you have further questions.

Advice on using funds from a SEP IRA to fund deals?

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