My LLC and my SDIRA - Origination fees for my LLC

[Steve Hiltabiddle]

I have a question about using my LLC to originate a loan that my SDIRA will fund. I will not be lending to myself but to qualified party so as not to create a prohibited transaction.

My question is, since my LLC is conducting the work to originate the loan, can my LLC receive origination fees as a result of that work, appearing as a separate line item on the HUD? My SDIRA will fund the loan and will receive repayment of the loan appropriately, just curious if the origination fee received by my LLC creates a prohibited transaction.

Thanks,

[Dmitriy Fomichenko]

@Steve Hiltabiddle

As Brian explained, you (and any entity that you own) are considered "disqualified person" to your IRA. IRS rules prohibit for any such person to provide any services to the plan. Regardless who the borrower is, YOUR LLC CAN NOT ORIGINATE THIS LOAN if the lender is your self-directed IRA.

Here is a direct link to the rules:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-prohibited-transactions