Self Directed IRA

[Bob McMonagle]

I am interested in possibly moving some of my ($100,000) (Currently Employed) 401K into a SDIRA so that I could have better access to the funds so I may use them to Rehab a couple of Properties.  I would most likely use a company that specializes in Real Estate/SDIRA to manage my SDIRA.  Quick question would be....

Am I permitted to use say up to $100,000 of my SDIRA and combine that with a Hard Money Lendor to Rehab a property?  If so, I would assume that the % of SDIRA used would be equivalent % to how much would be paid back to the SDIRA. Is this a viable strategy?  Has anyone been successful doing so?  Thanks.  Bob

[David Krulac]

@Doreen Chaisson is right.

There are a ton of IRS rules, and you have to follow each to the letter. If you screw it up the IRS can blow up your IRA and you would lose the IRS, and have to pay taxes and penalties.

The loan must be non-recourse, very few loans/mortgages are non recourse. Violate this rule and you will blow up your IRA.

You can't comingle your personal funds and the IRA funds, another non-no.

And you can't do a business in your IRA.

And you can't do personal work on IRA property, don't lift a hammer, don't act as GC, nada, nothing,

And you can't have dealing with prohibited people, like relatives and business partners.

And YOU can't benefit from the actions of your IRA. Some people even say that you can't use the same contractors on your IRA properties as your non-IRA properties, especially if the contractor gives you a better price because of your volume business including your IRA business.

Its complicated, and hazardous, be careful and get solid professional advise.