Husband and Wife each have their own SDIRA

[Account Closed]

I've already contacted 2 custodians on this matter and one says it's ok and the other says contact a CPA or lawyer. I've reached out to both but figured I'd ask here too.  I know it's a confusing subject so I'll try to illustrate it below. We haven't done this yet, just trying to make sure we don't do anything that is considered a prohibited transaction.

A) Brother's SDIRA and Sister's SDIRA buy rental property A together. This is not a prohibited transaction. 

B) Brother's SDIRA and Brother-in-Laws (Sister's husband) SDIRA buy rental property B together. This is not a prohibited transaction.

I know that we can do either A or B alone and it would be ok. But the question is can we do both A and B as long as the husband and wife's SDIRA's are not involved in the same property together with the brother's SDIRA?

[Dmitriy Fomichenko]

Originally posted by @John Underwood:

My understanding is that almost anyone can partner on a deal. You can even partner with you and your IRA. You just have to keep everything split equally based on the level of investment. There are prohibited transactions to keep in mind and be aware of.

Not quite... In fact, partnering with your IRA can be considered a "prohibited transaction" in many cases. You are considered to be "disqualified person" to your IRA. IRS rules prohibited any direct or indirect benefit for such person from his/her retirement account, and as such you are not allowed to furnish any service, goods or facilities to your 401k:

https://www.irs.gov/retirement-plans/plan-particip...

While in some instances it might be possible to get into an investment together with a disqualified person you must be very careful! In my experience dealing with thousands of clients and reviewing many potential transactions involving disqualified person the end result was a prohibited transaction. You also must remember that while in the beginning transaction might be structured in compliance with the rules there is always likelihood of it leading to prohibited transaction in the future because of disqualified person's involvement.

Once you have your personal funds and IRA funds in the same deal you are now opening a "can of worms" and the burden falls on you as the tax payer to proof that there are no personal benefits from your use of the IRA funds, and IRA did not benefit from the use of your personal funds. In most cases that is exactly why the IRA account holder wanted to partner. I would recommend agains it!