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Updated over 14 years ago on . Most recent reply
Self Directed IRA issues/questions
I'm trying to put together my first deal using our Self Directed IRA.
Our problem is we have no money for investing except what is in our SD IRA. I'm trying to find a way to use the SD IRA and be involved in a deal to receive part of the profits...we need to build up cash outside the SD IRA for future purchases. Is there a way to do this?
First, I get a loan and use the SD IRA for the down payment and fix. Won't work because the banks do not do non-recourse loans so the SD IRA requirements are not met.
Second, I understand that I can loan the money to anybody as long as they are non-disqualified (not a spouse, up line or down line)...using a promisary note. But how do I get a share of the profits?
Third, I also understand that I can loan the SD IRA to a business I'm affiliated with as long as it is 49% or less ownership...and the partner has to be a non-qualified individual and the managing member in the LLC. The SD IRA can NOT be used as collateral.
I feel like the stick man hitting his head on the wall over and over.
If anyone has information regarding investing with the SD IRA...I would greatly appreciate your input.
thx!
Most Popular Reply
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Penny,
What you need is a self-directed 401k, IRA no. This will give you the opportunity to do business both inside and outside the retirement fund since you can borrow from the 401k. The 401k also has another advantage in that there is no Unrelated Debt Financing tax which may be imposed with an IRA if debt is used.
If you use a 401k it is best to use a compliant LLC to protect the 401k against litigation.
Dan