Partnering with your Own SDIRA

[David Christie]

I am looking at a property and want to use my SDIRA to fund it, however, I will also have to fund part of it from my LLC as there is not enough in the SDIRA for the entire deal. Anyone have any advice on how best to do that and now be violating the "Prohibited Transaction" rule of SDIRA investing?

[Brian Eastman]

@Kevin Powell

While it may be theoretically possible to establish a multi-member LLC such as your CPA has suggested, I would speak from years of experience working with thousands of IRA investors that you would regret doing so. Such an entity becomes very limited and complex to manage.

If all 3 parties form the LLC together on day one, then the formation including multiple IRA and disqualified parties may not be an issue. The LLC would be limited as a one time funding shot, and could not accept additional funds. Neither party could buy out another. The LLC would need to file a partnership return at the state and federal levels. The K-1 issued to IRA parties would not be expected on a federal return, but may have tax implications at the state level.

Basically, you will have a lot of administrative overhead and cost.  Is the benefit you would receive by being able to pool these funds worth that?

And there always is the risk that you do something not quite right and fail an audit should one ever occur.

There are a lot of things that are possible, but just don't make sense.