Inherited IRA wondering about rollover possibilities for RE

[Debbie G.]

I'm inheriting an traditional IRA and I'm also looking at duplexes for buy and hold. I'm researching solo 401k and sd ira's but not sure if an inherited IRA can be rolled over into one of these and then I can use funds for down payments on RE buy and holds? Any suggestions where to find info? Thanks!

[Dmitriy Fomichenko]

Inherited IRA can be self-directed, but it can not be rolled over into Solo 401k nor in your IRA (account under your name), unless your inherited it from your spouse. The inherited IRA must stay in the name of the deceased.

[Brian Eastman]

@Debbie G.

As Dmitriy notes, you would have the option of self-directing the IRA.

The IRA will remain as an inherited account, and as the beneficiary account holder, you will likely be required to take a certain amount in distributions each year. This can usually be managed fairly easily from the return on investment from real estate, meaning that you can put the IRA capital to work, have it produce income, and draw off that income while leaving the principal (real estate) in place.

An IRA may use mortgage funding to purchase a property. The mortgage must be non-recourse, meaning no personal guarantee from you. The use of debt-financing within the IRA creates a small tax liability for the IRA known as UDFI.

There is a lot of good info here on BP to get you started.  Ultimately, you will want to discuss such programs with a professional plan provider, as well as your licensed tax advisor.

[Mark Nolan]

@Debbie Garland

The following IRS page covers the IRA Beneficiary Rollover Rules. https://www.irs.gov/publications/p590b/ch01.html