4 ms·
>Under these provisions, you would no longer be allowed to invest your IRA into private placements and single-member LLCs, regardless of your level of income or
by koboll 5y ago
>Under these provisions, you would no longer be allowed to invest your IRA into private placements and single-member LLCs, regardless of your level of income or wealth.
Huh. So under current law, you can take your IRA money and "invest" it in a single-member LLC? Wild. Does that let you circumvent the proscription against living in properties you own through your IRA? Since in that case, the "owner" would be the LLC, rather than yourself per se?
- mmd45 5y agoNo it doesn't as that would fall under the rules for prohibited transactions of which there are strict rules and penalties. See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-prohibited-transactions https://www.irs.gov/retirement-plans/plan-participant-employ... .
- kube-system 5y agoIt says that those types of transactions are prohibited between the plan and a disqualified person. Does it prohibit those same transactions between an investment within the plan (like an LLC) and a disqualified person? I mean, if I own Apple stock, I can buy things in the Apple store.
- mmd45 5y agoNo, the LLC is the same as the plan in terms of rules against prohibited transactions. Apple thought experiment works, but if you are personally generating revenue that moves the needle on a IRA investment that would be a no-no.
- supperburg 5y agoHuh. Under current tax laws you can literally dodge paying taxes using a totally unintended loophole in something called 401k. Wild.
- macksd 5y agoSame as with an IRA, though, it's intended for retirement savings and there are penalties for early withdrawal. The issue here (right or wrong) is self-directed IRAs being effectively usable for things other than growth investments.
- sokoloff 5y agoThe tax code (as written) doesn't even let you personally make repairs to property owned in a self-directed IRA. (Otherwise, you'd be able to work tax-free to improve an asset in your IRA.)
- TedDoesntTalk 5y agoI’ve never known anyone to own a property as an IRA holding. Is that possible??
- davio 5y agoPeople definitely own rental properties in self directed IRAs. You have to be completely hands off - must hire property management, can't fix anything, etc. I think you can get non-recourse mortgages, but it's more like 50% down instead of 20% like most non-owner occupied mortgages.
- loourr 5y agoAbsolutely. You can own almost all kinds of assets in your IRA today excluding collectibles.