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.

Dmitriy Fomichenko, Broker
(949) 228-9393

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.

@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:

https://www.irs.gov/retirement-plans/ira-one-rollover-per-year-rule

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!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.