SDIRA Prohibited Transaction

10 Replies

Is it considered a prohibited transaction to sell a note held by my IRA to my ex?

@Ron P.

Your ex-wife is not a disqualified party to your IRA, so on the surface, this would be an acceptable transaction.

Where there could be an issue is if there is any direct or indirect benefit to yourself or a disqualified party via the transaction.  If this note sale is done on favorable terms to mitigate some other demand on you related to divorce settlement, for example.

@Ron P.

generally, the ex-spouse is not considered a 'disqualified person' however there might be some other factors that might prevent your IRA from engaging in a transaction with your ex. I suggest you seek some guidance from a qualified professional regarding your specific situation.

@Brian Eastman

Divorce was a long time ago, no conflict there I can see.  No offset, no alimony, no child support, nothing.

My IRA holds a first and second against the same property. I would sell her the first and keep the second. Both loans are current and very well secured with a good equity cushion. I see this more as a courtesy to her than some kind of a bailout as it is a great note with a good interest rate.

@Ron Plata

Not it is not prohibited to process a promissory note from a self-directed IRA to an ex-spouse.

To learn more about the prohibited transaction rules, see the following:

http://www.ritaus.org/assets/documents/RITA.Prohib...

http://www.irs.gov/Retirement-Plans/Plan-Participa...

http://www.irs.gov/irm/part4/irm_04-072-011.html

https://www.law.cornell.edu/uscode/text/26/4975

http://www.journalofaccountancy.com/Issues/2000/Ap...

Contact Jim Hitt with American IRA (google him) he manages over $300,000,000.00 in assets and this guy knows what he is doing.

If you need any knowledge on real estate please fell free to give me a shout out along the way.

I also believe Dmitriy Fomichenko is solid as well in his knowlege.

Originally posted by @Brian Eastman :

@Ron P.

Your ex-wife is not a disqualified party to your IRA, so on the surface, this would be an acceptable transaction.

Where there could be an issue is if there is any direct or indirect benefit to yourself or a disqualified party via the transaction.  If this note sale is done on favorable terms to mitigate some other demand on you related to divorce settlement, for example.

 This is exactly right.

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