SDIRA Buyer's Remorse

[Andrew Taylor]

What, if any, is the "best" - or maybe "correct" is a better term - way to shift an asset or benefit from an SDIRA to personal use? Or IS there a way?

My SDIRA is small (less than $15k) but it's the only money I have to invest. I would like to be able to have use of the proceeds of my investments before I'm retirement age. Can I invest in something with a third party, collect a reasonable return for some amount of time, and then have the SDIRA's interest in the asset "expire" (for lack of a better term) and shift to me (or another entity)?

Say I buy a $5000 interest in a friend's deal, with the understanding that my SDIRA will earn a 20% return and that all further proceeds will be due to Me Personally LLC. After a couple of years, my SDIRA has earned $6000 ($5k + 20%) and ceases to receive payments. Going forward, my friend sends the distributions to Me Personally LLC.

Am I better off just taking the distribution and paying the penalty so I can do what I want with the money?