Partnership using Self Directed IRA.

[Kevin Darrell]

If I were to convert my 401k to a Self Directed IRA would it be possible to use those funds to partner with someone and If possible how would that work?

[Steven Hamilton II]

Originally posted by @Dmitriy Fomichenko:

Originally posted by @Bob Malecki:

... this way I can start to build equity in the new 401k to move my house flipping operation into that tax advantaged shelter. Thoughts?

Bob, full tax advantage in your 401k is achieved by making passive investments. If however you engage in an active business with your 401k (flipping properties is an active business) - the income from that activity would be subject to Unrelated Business Income Tax (UBIT) which tops at about 40%. In this case your 401k would have to report and pay taxes on this income. Then when take distributions at retirement you will pay ordinary income tax at that time again. So in essence you are taxed twice, which still might be worth it depending on returns you are generating and comparing that with current returns your retirement account is receiving. You just need to be aware of this and be sure to consult with an experienced tax-professional before engaging in a transaction like this (I am not one and this is not a tax-advice). 

 That said that would depend upon how often said investments are made and what other investments are made alongside them.   one or two flips, there was even a case where three were allowed without issue.  Lending for an equity stake is always good.