Can I borrow or take a loan from my self-directed IRA LLC

QUESTION: Can I open a self-directed IRA LLC with your company and then take a loan from it?

Much appreciated,

Lynn O. in Washington

ANSWER:  Good question, but no the IRA rules including the self-directed IRA rules do not allow the IRA owner to borrow from his or her IRA, even a self-Directed IRA owned LLC. The consequence of the IRA owner or any disqualified party (e.g., the IRA owner’s spouse, parents, daughter, son and grandparents, to name a few) borrowing / taking a loan from any type of IRA will disqualify the IRA, resulting in treating the entire IRA as being distributed and included in the IRA owner’s income for the year.

However, loans are permitted from qualified plans such as a solo 401k, a type of retirement plan for the self-employed with no full-time employees and that falls under section 401(a).  Click here to learn more about the solo 401k loan.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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