In addition to real estate what investments can my IRA purchase?
Closely-held stocks, Private Limited Partnerships, Limited Liability Companies, Real estate including Tenants in Common, Debt financed or leveraged real estate, International Real Estate, Tax Lien Certificates, Promissory notes or Corporate Debt Offerings, Trust Deeds, Mortgages, Managed commodity trading accounts, Mutual funds in any mutual fund family, Stocks and Bonds in a brokerage account, Annuities, Public Limited Partnerships, Direct participation programs , REITs, Treasuries, Bank CDs, U.S. Treasury coins or bullion.
Can my LLC borrow funds to finance a real estate purchase?
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).
How much time does it take to implement this strategy?
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.
Must I form my LLC in my state of residence?
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.
Will my custodian assist me in setting up an IRA LLC?
No, they will not. However, Self Directed IRA LLC can set up your IRA LLC
Must I have a custodian for my 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
Can I still invest in stocks,bonds and mutual funds?
Yes, you can invest in anything that is not a prohibited transaction
Can my LLC invest in other countries?
Yes, there are a lot of investment opportunities outside the country that are now available to you including international real estate.
Can my LLC make loans with its funds?
Yes, you can make loans to any person or entity that does not violate the “related party” rules.
Can I buy vacation property?
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)
Can I co-invest with the IRA of my spouse or other investors?
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
Can my LLC purchase real estate I already own?
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,
How do I know this is legal?
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

Can I do this myself?
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.
Is this a new law?
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 .
What type of retirement accounts can I move into a Self Directed IRA LLC?
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.
Do I need a Self Directed IRA LLC?
That depends on what type of investments you are planning on making. If you want to invest in alternative investments such as real estate, mortgages, trust deeds , tax liens, fix and flips, loans or anything other than the normal stocks and mutual funds, a Self Directed IRA LLC is the most efficient and cost effective way to invest. However if you suffer from paralysis by analysis or cannot make decisions without checking with outside influences, it is probably not going to work for you. With a Self Directed IRA LLC you are the decision maker.

For the past 28 years I had my entire retirement savings invested in the stock market. As you can imagine, throughout those years, I watched my retirement’s net worth fluctuate through huge swings between gains and losses. Obviously the gains caused joy in my household but the losses brought frustration and worry. In either case, no matter how well, or how badly, my retirement portfolio performed, I constantly felt an uncomfortable sense of insecurity. I always worried that my losses would out-number my gains or that inflation would depreciate my savings to a level that would be insufficient to last throughout my lifetime. For me, the uncertainty of the stock market caused too much stress in my life.

Finally, I spoke to a friend who recommended that I take matters into my own hands and convert my retirement account into a Self-Directed IRA. He explained that, instead of riding the turbulent waters of an unpredictable sea of stock market reactions, I could invest in assets with more stable returns. The assets can be in a variety of forms such as: real estate, private business, gold, loans, etc, etc.

I decided to follow my friend’s advice but I didn’t know how to set up a Self-directed IRA. Fortunately, I logged on to the Internet and found a wonderful company called “Self Directed IRA LLC”. I spoke to Tom Walker who was very knowledgeable, professional and courteous. He explained the process for transferring my retirement funds from a stockbroker account to a Self-Directed IRA account. He also explained all the steps required to guarantee that there would be no negative tax consequences. I was amazed at how simple it was to accomplish. Tom made the whole process extremely easy. He set up a Limited Liability Company in my name; took care of all the paperwork; set up IRS-approved accounts; led me step-by-step through the entire procedure, and even filed the required State agency forms for my LLC.

I now have stable assets in my own-self directed IRA that are out-performing the stock market. I was able to purchase the assets with tax-deferred funds and I am sleeping much better at night. I highly recommend Tom Walker and “Self Directed IRA LLC” to anyone who is considering a Self-Directed IRA. You will enjoy doing business with Tom and his company.

Dan Scanlon

Anaheim, CA

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