Using a self directed IRA to invest in my LLC..?

[Cody Skidmore]

My fiance and I recently purchased our first property to flip. Prior to purchasing the property we created an LLC and created a bank account for the LLC. We both also work a regular 9-5 job. Actually, we both had just changed our 9-5 jobs shortly before we purchased our flip. I had a normal 401(k), while she had a 403(b). We were both going to rollover our retirement accounts from our old jobs to the company that holds our new, current retirement accounts. However, we are now at the point in the flip where I need a truck and trailer on a daily basis. We have enough in our old retirement accounts to purchased a newer truck with cash (we would purchase the truck under the business since it would be used primarily as a work truck). My question is can we both roll our retirement enold accounts to a self-directed IRA and invest the funds to our business and use that money to purchase a truck? Or would this be considered a "prohibited transaction" in the eyes of the IRS? Is there any other way that we would be able to use the funds from our retirement accounts to purchase a vehicle for our business without getting stuck paying taxes and a penalty? I apologize if my question is hard to follow at places but any ideas or thoughts would be greatly helpful and appreciated. Thanks!!

[Brian Eastman]

@Cody Skidmore

Your LLC and your flipping business are disqualified to your IRA. What you seek to do is not possible in an IRA as it would create a prohibited transaction.

A Rollover as Business Startup (ROBS plan) would allow you to use your retirement funds to capitalize a true real estate development company that you are engaged in, and that company could buy a truck.  I would not, however, recommend that plan just for a truck purchase.  If you have the available capital to fund the business to the tune of being able to execute 3+ flip transactions per year, then it might make sense.

If you are just seeking a work truck for the occasional flip project, just go out and find something used and inexpensive and pay for it personally.