SDIRA ownership and liability

[Ryan Moore]

Hypothetical if I were to purchase a property thru a SDIRA, who owns it? Is it under my name or can a legal entity be formed to own it? Also, if someone were to sue in relation to that property, since it's retirement is that asset still protected like other retirement accounts are protected?

[Brian Eastman]

@Ryan Moore

The IRA will own the property. If you purchase directly via an IRA held by a custodian, the titling would be "XYZ Trust Co. Custodian FBO Ryan Moore IRA". This does not really provide any asset protection for you, as courts have determined that a lawsuit against a property held in that IRA can seek remedy from you as the individual if the insurance and/or assets of the IRA are not sufficient to satisfy a judgement.

If you establish a Checkbook IRA LLC, greater asset protection is provided. The IRA owns the LLC, and the LLC owns and is on title to the property. This isolates the property and its liability within that LLC entity.

Retirement accounts provide protection in the other direction. If you were to be sued personally or go though bankruptcy, your IRA is generally protected to $1M, depending on a few factors such as your state, the type of judgement, etc.