Frequently Asked Questions

That depends upon how long it takes your current IRA Custodian to transfer your funds to your new IRA Custodian. Some are fast some are slow. The entire process should take 2 to 4 weeks.

No, you can use most any state you prefer. Nevada, Arizona and Florida are popular options. You can form an LLC in a state without residing in it.

Any retirement account that allows a transfer to a traditional IRA including 401k plans, a traditional IRA, a Roth IRA , and a Simplified Employee Pension plan, or SEP-IRA.

Absolutely, all IRAs are required to be held by a IRA Custodian approved by the IRS. Only a few of these allow truly self-directed IRAs

No, they will not. However, Self Directed IRA LLC can set up your IRA LLC

Yes, both IRAs can be owners of the LLC, in fact so can other individuals and entities as long as the other owners are not disqualified persons. This is very useful for large investments

Yes, but only with the use of a non-recourse promissory note issued by a lending institution or by the seller of the property. The non-recourse promissory note cannot be personally guaranteed, and the lending institution can only look to the property securing the note as collateral. Important: Debt-financed property may generate Unrelated Business IncomeTax (“UBIT”), and any taxes due must be paid by the account. For more information regarding UBIT, please consult your tax advisor. (See IRA Non-Recourse Financing).

Yes, you can invest in anything that is not a prohibited transaction

Yes, you can make loans to any person or entity that does not violate the “related party” rules.

Yes, but you can not personally use it. Neither you nor any other disqualified person can have any personal use or benefit of the property while it is held in your retirement account. The property must be purchased for investment purposes only. However upon reaching retirement age you could take the property as a distribution (see Buying International Real Estate with an IRA)

No, not without filing for an exemption. Property that you or a disqualified person has ever owned is not eligible to be purchased by your LLC since this would be a prohibited transaction,

No. It has been allowed for many years. Few people seemed to know about this option – or even care – until the stock market began to decline. Financial institutions, meanwhile, had little incentive to recommend something other than stocks, bonds or mutual funds, since these provided a source for their fees. Section 408 of the Internal Revenue Code permits individuals to use a Self-Directed IRA to purchase real estate investments such as commercial property, condominiums, residential property, international real estate, mortgages, trust deeds, real estate contracts, private placements, limited partnerships, limited liability company’s (LLC’s), and many other types of investments with retirement funds held in many common forms of IRA’s, including 401k’s, Traditional IRA, Roth IRA, and Simplified Employee Pension Plan or SEP-IRA. (see IRS Publication 590 Individual Retirement Arrangements). Also see Swanson vs. Commissioner .

Discuss this strategy with your tax advisor. If he is unfamiliar with it have him consult resources such as The Journal of Taxation, the Journal of New York CPA’s and Trust and Estates magazine and other resources used by tax attorneys and PAs.

You can also see Section 408 of the Internal Revenue Code. Also see Swanson vs. Commissioner

In a word: DON’T. The reason is: You don’t know what you don’t know. The penalties are severe for prohibited transactions which are easily and unknowingly created.