SDIRA ministerial services question

[Robert Shelton]

Hello all, We have just funded my wife’s SDIRA and have been reading everything we can get our hands on. Just finished “Leverage your IRA” by Matthew Allen amongst others. Still not completely clear on UBIT and UDFI but I’m working on it. My questions are in relation to ministerial services and what is acceptable. I know the best answer everyone can give is to consult my tax attorney, but hopefully this conversation will be a value add to the knowledge of the community as a whole. Primer...my personal holdings use the BRRRR strategy and currently total 5 properties out of state (SC). Previous to my investing is SC I did 1 local (MD) flip and realized I like to keep what I buy. My best friend and his father have owned a local kitchen and bath remodeling business for 40 years and I have been able to purchase all my kitchens and baths at significant discounts (read at cost). This has been a tremendous help to my bottom line and I expect to be able to continue this with all my personal holdings. Another resource I have been able to benefit from is the removal of high-end kitchen, baths and counters which I have stored in my Barn for future rental projects. For these “throw always” I have incurred 0 expense. Final wrinkle, the owner of the kitchen and bath company we do all our business with, my best friends dad, recently married my wife’s mother. Whew...Questions, all for transactions within the new SDIRA: 1.) Can I continue to use this company or have they become disqualified? 2.) If they are not disqualified, can I receive a discount on kitchens and baths bought through this company? 3.) Can I personally deliver from MD to SC, kitchens bought from this company? I travel back and forth about 1x a month already. 4.) Can I use “recycled” cabinets and counters that I have stored in my barn? For now this is the start of my questions and hopefully it will not be a waste of the forums time. Thank you for reading and hopefully we can all learn from the answers provided.

[Brian Eastman]

@Robert Shelton

It does not sound as if the business has become disqualified through the marriage. While you would be a disqualified party to your mother-in-law's IRA, she is not disqualified to your IRA.

That said, you would want to be very careful in having your IRA deal with the company, and any transactions should be at normal market rates.

IRS rules prohibit any direct or indirect benefit between an IRA and a disqualified party. If your IRA is receiving a discount because of your relationship with a vendor, then you are providing a benefit to the IRA.

You should definitely not become the delivery boy for your IRA. That would be considered providing services and adding value.

You should absolutely not provide personally owned materials to the IRA.

Have you spoken with your SDIRA provider on these topics?  They should be able to assist you.