Know your Paperwork on IRA Investments

Huge case study for you today. Will keep the user anonymous on this one.

Had a client, we will call him, Locke, who owned a small real estate investment company buying, fixing and flipping properties. Mr. Locke also wanted to get involved with IRA investments in his business so he could earn tax free income for his retirement. So, Mr. Locke purchased a property from us a few years ago, and called me to let me know his IRA account was under investigation with the IRS. Turns out, Mr. Locke in his buying, fixing and flipping business was also employing his IRA to do deals. He broke a few of the cardinal rules of IRA investing. He rehabbed the property himself, he found the buyer himself, and he co-mingled funds from his business. Those 3 errors most likely are going to cost him in penalties in his IRA.

Remember the three golden rules of IRA Investing

#1. No Self Dealing

#2. Must use a Custodian

#3. Not for personal use.

Having investing everyone!