Take out what you want as a distribution. 

@Herb DornJust jumping in on this last bit of the thread, so apologies if I have missed anything substantive higher up.Yes, an IRA would not allow for penalty free distributions prior to age 59 1/2 as the 457b plan does. 

As your portfolio expands you can focus on areas that play upon each technique, or find a region that supports a bit of both.Remember that cash flow creates passive income and comfort, and appreciation creates wealth.

It is important to keep a separate bank account for the LLC for legal purposes, but for tax purposes , taking money out is just considered a distribution to the shareholder (you).I agree with Natalie- if you don't need the money, I just wouldn't charge your rental property a management fee.If you do need the money, as long as your distribution does not decrease your basis below 0, then it shouldn't be taxable.

Wholesaling is a perfectly legitimate strategy, but there is so much misinformation out there....so many sketchy techniques taught. 

If I did, I would pay income tax and 10% penalty.QUESTION: If my kids took a $5500 distribution each (which is the max roth contribution, and less than the $10400 max allowed by the irs to NOT file an income tax return) would there be any penalties or taxes to be paid other than the 10% early withdrawal penalty?

This document will entail information such as how income/losses will be split, who will manage the partnership etc.The partnership will be required to file a federal form 1065 and possibly an Ohio 1140.The partnership will be required to distribute a K-1 to each partner which details each partner's share of income/losses. 

The risks are what I need to know more about as well.Below is what is stated, regarding distributions, in the Joint Venture agreement that she sent:10.

Any amounts would be taxable distributions and likely subject to penalty.You can use your IRA for investing but the funds have to remain retirement funds and the normal strategies of growing the investments are limited a bit as explained above.You haven't asked this yet but I feel you may - you can't borrow from your IRA and generally, you can't invest with your IRA for the purchase of an investment property.

I will post something more in detail on the technique some time later on my YouTube channel or I'll write a blog on it here at Bigger Pockets.