IRA Business Financing | Self-Directed IRA with Checkbook Control

QUESTION: I want to buy rental property with my IRA and have heard of the IRA business financing option that would allow me to receive a salary.  Can you help me understand if I can use my IRA to buy rental property?

Regards, Kathy Y in California

ANSWER: You appear to be referring to the rollover as business start-up (ROBS) arrangement also known as 401k small business financing. You may qualify for the ROBS arrangement if your business is actively engaged in the management and development of the real estate it owns. However, It doesn’t appear that you would qualify for a ROBS which involves rolling over IRA funds or other retirement funds to a new 401k sponsored by an operating company (e.g., a restaurant, clothing store, sports equipment store, etc.). The rolled over IRA funds would then be used in the financing of the C-Corporation through the purchase of stock shares.  This is just a brief description of the ROBS arrangement. To learn more about the ROBS arrangement click here.

Since the ROBS arrangement is not for investing in real estate rentals but rather an operating business, you may want to consider a self-directed IRA with checkbook control for investing in rental property.  This would entail opening a self-directed IRA with a custodian that specializes in self-directed IRAS (e.g., IRA Services Trust Company or Sunwest Trust), forming an LLC containing specific language surrounding the IRA rules, directing the self-directed IRA custodian to process a purchase of member units in the newly formed LLC, opening a checking account for the LLC, and after funding the LLC investment with IRA funds investing in real estate. This is just a brief summary regarding the self-directed IRA LLC transaction. To learn more visit self-directed IRA LLC.

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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