401K Self Directed IRA in an LLC

[Brittney J.]

1. I have an opportunity to use my 401k selfdireted IRA (which is an LLC, so the member is uDirect, and I am the Manager) for a commercial real estate deal. I will be purchasing the commercial property with another LLC, and be getting a loan, but want to use my self-directed IRA as a down payment for the transaction. The way I could structure it is the 1st and 2nd loan: The 1st is through the bank and the 2nd loan would be similar to hard money - the selfdirected LLC would be lending the down payment to the the other LLC for the commercial real estate transaction. Since it is hard money, the self-directed IRA LLC would eart 5.5% interest.

Question:  is this type of transaction prohibited or what are the things I need to make sure I have happen.  I would like to discuss with a tax expert on the use of 401k self-directed IRAs on this transaction

2. My selfdireted IRA LLC is funded in my business checking account. I also have a business credit card with that LLC. I had to make some payments related to the LLC with the credit card.

Question: can I pay off my credit card with the LLC checking account without any penalty? Basically taking money from the LLC checking account to pay the LLC business credit card. The business credit card transactions were to pay udirect annual fees and wire transfer fee. I just want to make sure I can pay off the business credit card with my selfdirected IRA LLC account.

[Dmitriy Fomichenko]

Brittney,

1. Please clarify: will your IRA LLC be purchasing the property or will lending to another LLC, which will be the buyer? In your description you said that you will be doing both, which doesn't make sense.

2. You can have a debit card for your IRA LLC checking account, but you are not allowed to have a credit card because it will require personal guarantee. This would violate IRS rules.