I will have roughly $20K cash and $20K in my Roth IRA (aggressive mutual fund).

I'm sure that you can't be in an LLC with your parents IRA.

We are maxing out his IRA and for a while, he's been putting about 10% in his 401(k) with a company match up to 2.5%.  

To close the book on the TK thought though, I think if you find the right TK guy in the right market, and have the right financial cicrumstances (such as potentially investing your money out of an IRA instead of being exposed to the stock market), then it could make sense.

I have a selft directed Roth IRA as well as a self directed Traditional IRA.  

You may already know this, but your HSA can invest just like, and along side your IRA or solo 401(k).  

We plan to open a traditional IRA for both my wife and I, which will allow us to put in $11K a year and invest the remaining $5K or $6,650 into a self directed health savings account (HSA).

---but i would suggest helping him learn the ropes and make the decisions  and be the mouthpiece for deals. while you or another adult would sign the docs.he can benefit by have the profits flow into a Coverdell or, if the kid has some earned income (from any w-2 or 1099 source) a self directed IRA.

I want to use the IRA to invest in real estate.

I am looking to fund some flip deals with my IRA, so keep me in mind.