Borrowing short term from SEP IRA

6 Replies

Hey guys and gals,

I found a SFH that is foreclosed and needs some work. I am interested in purchasing it and keeping it as a rental after I do the needed repairs and fixes.

Here is my issue...

In the last two years I have bid on several separate properties in my area and I have lost all of them.  It seems to be all cash buyers with quick closes.  The last property I was told that the bank even took a lower bid than mine that was all cash.  

With that in mind...

I have the funds to buy the house outright with my SEP IRA. Is it possible to borrow the funds from my IRA (I believe I have 120 days) and then replace them in some other fashion? Such as, home equity loan from another property or refinancing the purchased property into a 15-30 year traditional loan?

Appreciate any feedback.  Thanks in advance!

@Daniel P.

It is not possible to borrow from SEP IRA. You can rollover your funds to a Solo 401k, which has a loan provision, but the loan is limited to $50K or 50% of the balance, whichever is less.

How much is in your SEP and how much money do you need?

You can also use self-directed Solo 401k to buy this as an investment property inside of the plan.

House is 75K.  I have a few hundred K in the account. 

I suppose I worded my title wrong. My apologies. I not looking to borrow from the IRA, I am simply going to roll it over utilizing my 60 day grace period... during which I would like to generate a similar amount of money through a refinance of the purchased property or equity loan from an existing property I already own.

You are playing dangerous game here... if you are one day over 60 days the entire amount becomes taxable distribution 

@Daniel P.

Yes the 60-day rollover rule applies to all IRAs including SEP IRAs. However, you can only do one 60-day rollover per 12 months, and this rule applies to all IRAs in aggregate. For example, if you have another IRA, you will not be able to also do a 60-dary rollover from it until the 12-month period has been satisfied under the SEP IRA.

See the following:

Thank you Mark and Dmitriy.

I guess my question is if I utilize this 60-day rollover to purchase the property, is it possible to recover those fund through more traditional means within 30-45 days? Are there investors out there that do this and what is your experience? 

Thanks again!

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