Second Example of Real Estate Investments That Can Be Made Using IRA Funds
Jennifer has formed an LLC that will buy property that will be developed. She wants to make her IRA the primary investor. She has friends that also will invest in the LLC. Jennifer’s IRA can participate in the formation of the LLC provided Jennifer and related persons and parties do not already own 50% or more of the LLC in aggregate. If she is just starting the LLC, then the IRA can own something less than 100% (e.g., 90%). The LLC is considered a real estate operating company and, therefore, the assets are not considered plan assets unless there is 100% ownership by the IRA. If the company's assets are deemed plan assets, then a transaction between the company and the IRA owner is considered illegal. Because of some recent legal rulings involving self-dealing, we recommend that you consult with a competent attorney if you intend to have a personal role in any entity in which your IRA is an investor.
