Self Directed Ira question

[Tyler Caruso]

I had some funds remaining in my self directed ira and wanted to see if this would be an acceptable transaction.

Here's the scenario:

Tyler's (me) Ira lends 50k to John (made up individual) via secured promissory note

John’s ira lends 50k to Tyler (me) via secured promissory note

John wouldn't be a family member.

Is this an acceptable transaction?

Thanks

[Doreen Chaisson]

This is called reciprocal lending and is a linked transaction to a prohibited transaction. You are using your IRA funds to ultimately gain a personal benefit (as is your friend) - access to cash that is otherwise unavailable sitting in your IRA.

Furthermore - you cannot lend the money to your friend from your IRA, and then have him give you the money personally (outside of his IRA). Again, this is a Prohibited Transaction. Anything that results in direct, implied or even the appearance of personal benefit is prohibited.