Most people don’t realize this, but your IRA can do far more than invest in stocks and mutual funds. Under IRS guidelines, you can legally partner with your own IRA to invest in real estate, private lending, or other alternative assets — and when done correctly, this can be a powerful wealth-building strategy.
The key is using a Self-Directed IRA LLC, a structure that gives you checkbook control over your IRA and allows you to co-invest with personal funds in a fully compliant way.
What Does It Mean to Partner with Your IRA?
Partnering with your IRA means you and your retirement account invest together in the same deal, each contributing capital and receiving a proportional share of returns. Unlike taking a distribution or borrowing from your IRA (which is prohibited), this strategy keeps everything inside IRS guidelines.
You can also partner with other people or IRAs — like your spouse or business partner — depending on how the deal is structured.
Why Use a Self-Directed IRA LLC?
A Self-Directed IRA LLC gives your IRA its own limited liability company, complete with a separate tax ID and checking account. This allows you to execute deals quickly, write checks directly, and structure joint investments without going through your IRA custodian for every transaction.
Benefits include:
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✅ Direct control over IRA funds
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✅ Fast execution using a checkbook
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✅ Liability protection via the LLC
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✅ Flexibility in deal structuring and partnerships
Real Estate Example: Joint Purchase
Imagine you find a $200,000 rental property but only have $50,000 personally. Your IRA has $150,000. Here’s how you partner:
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You invest $50,000
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Your IRA LLC invests $150,000
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Ownership: 25% (you) / 75% (IRA)
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Rents, expenses, and profits are split accordingly
This strategy allows you to leverage both funding sources without taking on debt or violating IRS rules.
Private Lending Example: Joint Note Funding
You want to fund a $100,000 private loan at 10% interest:
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You invest $30,000
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Your IRA LLC invests $70,000
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The borrower signs one note
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Interest income is split 30/70 between you and the IRA
It’s a simple, effective way to scale up your lending portfolio while maximizing your retirement returns.
Step-by-Step Guide to Partnering
- Open a Self-Directed IRA
- Form an LLC (owned by your IRA and you, if applicable)
- Fund the LLC via a rollover or transfer
- Create an Operating Agreement to define ownership shares
- Open a bank account for the LLC
- Find a deal and invest jointly
- Track income and expenses based on ownership percentages
Tip: Use a multi-member LLC structure when partnering with personal funds or other investors.
What to Avoid (Prohibited Transactions)
Violating the IRS’s “prohibited transaction” rules can lead to disqualification of your IRA. Avoid:
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❌ Performing labor or management for the IRA-owned property
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❌ Mixing personal and IRA funds after the deal has closed
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❌ Paying yourself from the IRA’s share of the investment
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❌ Commingling funds in one bank account
All ownership contributions must be made at the start, not mid-deal.
Best Practices
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✅ Keep personal and IRA funds separate
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✅ Use written agreements (JV or operating agreement)
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✅ Work with a knowledgeable provider
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✅ Track allocations carefully
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✅ Get CPA advice if UBTI may apply
Partnering with your IRA is a smart way to use all available capital to grow your wealth — combining the power of taxable and tax-deferred dollars in a single deal. When structured properly with a Self-Directed IRA LLC, you can take full control while staying fully compliant.
Need help structuring your deal?
We help clients in all 50 states set up Self-Directed IRA LLCs and partner structures.
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The information contained on this website has been supplied as general information. We do not provide investment, legal or accounting advice. We recommend that you seek advice from a qualified local investment, accounting or legal counsel.
