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Updated about 4 years ago on . Most recent reply presented by

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36
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Micah Starbuck
  • Investor
  • KNOXVILLE, TN
5
Votes |
36
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ROBS -> Self Directed IRA -> ROBS?

Micah Starbuck
  • Investor
  • KNOXVILLE, TN
Posted

I've been brainstorming on the best way to leverage my employer 401k to scratch out a living.

I know there are limits on what you can do with each type of approach when utilizing retirement money.  A ROBS is good to make an income but bad for holding property where Self Directed IRAs are good for holding property but you can't get paid.

So here's my question: Can I use a ROBS to purchase and renovate property (allowing me to get paid to run the project) then sell the property from the ROBS to a Self Directed IRA and then have the Self Directed IRA hire a second ROBS to manage the property (and allow me to get paid to manage the property)?

In other words: ROBS1 (fix and flip) sells to Self Directed IRA (to hold) who hires ROBS2 (to manage property).

I was thinking this might work as ownership of the property remains within the retirement accounts and I don't directly benefit from the renovation or sale of the property but allows me to get paid for managing the assets within the account.

Yes/No/Sketchy Maybe?

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2,878
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Brian Eastman
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
2,536
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2,878
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Brian Eastman
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
Replied

@Micah Starbuck

You cannot do what you propose.

If your 401k is with your current employer as it sounds, it is not even eligible to be moved in most cases.

A ROBS does work for active real estate development such as flipping, assuming a viable pace of turnover such as at least 2-3 properties per year.

An IRA could not purchase property from you or a company you own, which is the deal killer for your program. The other issue is that if the ROBS owns the property, how do you release the cash to rollover to an IRA, but that point is really moot.

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