Mixing ROTH & Tradtional SDIRAs in Multimember LLC?

[Daniel Dietz]

Hello all, 

I will try to keep this simple, but might be hard to do.

1) Right now I have a SDIRA that had existing ROTH funds rolled (transfered?) into it from my Fidelity account a few years ago. The SDIRA then invested into a 3 way LLC to own 33.3% and buy properties to hold for rentals paying all cash from the 3 SDIRAs. The other partners both used Traditional IRAs when the rolled over to their SDIRAs.

We are to the point we are ready to buy some more. The one potential problems (maybe I am over thinking things) Is that the funds *I* have to use now are Traditional IRA - I am out of ROTH in my regular account. One of the other partners is out Traditional IRA funds and needs to use ROTH this time. The third partner could probably go either way.

My understanding is that the ones of us who want to 'mix the types of IRAs' would need a *separate* account for each type of SDIRA - makes sense I guess. 

Will this not create a problem since there would now be 5-6 accounts involved instead of the original 3 accounts that each make up 1/3 of the LLC. It seems like it might be changing the structure of the LLC enough to cause issues.

I have talked to our custodian (that is who told me we would need separate accounts) and will also be talking to the Lawyer who helped set things up, but wanted to gather some thoughts here first

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2) This new investment we will be using non recourse lending, and likely to do that on other new deals too. With the SOLO401Ks not having the same tax issues as SDIRAs when using leverage, would it make since to 'start over' with SOLO401K accounts (we all would qualify) and form a new LLC with the new accounts being owners again? The first property would be 250K with borrowing 150K from non recourse lender, and likely adding a new property every 3-4 years of similar size.

I will be giving a couple of you pros on here a call shortly too to work through this on more detail. 

Thanks, Dan Dietz

[Dmitriy Fomichenko]

Dan, if I understand you correctly you will not be able to infuse any more funds into this LLC, given the fact that your Roth IRA is a member in this LLC and you only have traditional IRA funds to use.

Yes, using a Solo 401k might work. The only issue for one of your partners who wants to use Roth funds is this: Roth IRA can not be rolled over into Solo 401k.