Using IRA money to buy / create notes

[Tricia O'Brien]

I recently heard that investors can take money out of their IRA to lend as hard money lenders or to buy notes without paying the 10% penalty to the IRS. Is this true? Has anyone done this? Any replies would be appreciated!

[Louis Alvarez]

Tricia, you are probably referring to the concept of a self directed IRA. There are numerous individuals here on BP that set these types of stuctures up. Do some research and talk to your CPA before you jump in. There are very specific rules ( do's and don't) the you need to be aware of. If not done properly you will not only be subject to the penalty but you will also be taxed on the money as if you took it out of your retirement plan. I'm sure you will get some additional comments from the promoters of these SDIRAs shortly.