Does anyone know this technique? I heard it once, but now the details have gone fuzzy.
It was 2 people, each with roughly equivalent (I thought side by side houses ) owned free and clear, lets say worth 100k each, and self directed IRA's. Each sold the other one options to purchase their house for 25k, 5 k for the option. then each exercised the option, sold the house, and presto an IRA with 5 k in it now had 75k in it! They do it a few more times, and that is how to get tremendous amounts of money into self directed IRA, now to lend, invest, or do anything else self directed IRA's can do! Has anyone used this technique, know investors who have, or have any more info on details?
What you're describing is actually prohibited by the IRS. If audited and discovered, the transactions would be deemed as arrangements and both accounts would be penalized.
If you're self-employed, consider the solo(k) structure for more flexible contribution limits.