401K TO SELF DIRECTED IRA, structure?????? tax??????

[Jordan Lassiter]

So, me and my business partner have built a decent portfolio and are now getting to the point where we need to raise capital to keep the ball moving at a good pace. I have a direct family member who wants to invest with us a debt partner. We have come to terms with an initial 70k investment from her at 8.5% interest for 5 years which can be secured by a piece of real estate. The wall we are hitting is that she wants to use her traditional retirement account but does not want to be taxed yet. My understanding is that you can roll the 401k into a self-directed IRA without any tax penalties, and she is over 59.5 years old so there is no pre penalties either. I'm having a hard time finding a custodian that offers this type of account for this purpose. Most are telling me it can be done but its murky waters and that's about it. The process would be that she rolls her traditional 401k into self-directed IRA, then wires her 70k investment from IRA account to our LLC our LLC will pay her monthly installments at 8.5% and balloon payment at year 5....Can this be done????