IRA Financing Corporation Question

General Real Estate Investing
1

All:

I’m fortunate enough to be 33 years old, and have a well funded IRA, thanks to a stock plan from my employer. One of my reasonings for staying at my company for a few extra years was to eventually start a real estate development company.

Since my startup capital is in an IRA, and I’ve been planning for a few years, I’m starting to try to think practically how this situation will work, and if it is “really” do-able.

I have seen on the web and in a few books that it is possible to create a corporation with funds from an IRA. I plan to speak with an attorney soon about this part of it.

However, I’ve also heard that there are certain restrictions about the IRA funding. Specifically, that it cannot be used for a residence for the IRA owner. I was hoping to use a portion of the capital to either puchase a multifamily and live in 1 of the units, or to purchase a fixer upper and renovate it, then sell it.

My question is: does anyone know if this can be done, assuming that a corporation is created. Is it free to invest in any type of real estate, or does the IRA put restrictions on it?

Also, in the long run, if successful, can the corporation pay me as CEO? Or does the IRA have anything to do with that?

I would appreciate any good resources on the subject, either books or the web. I’m trying to get my ducks in a row.

2

Just curious. If your IRA contribution is limited to $3000 per year, how is it “well funded” so soon, given your age? How did your employer’s stock plan help?

Are you referring to a 401K with employer matching instead of an IRA?

3

[i]Just curious. If your IRA contribution is limited to $3000 per year, how is it “well funded” so soon, given your age? How did your employer’s stock plan help?

Are you referring to a 401K with employer matching instead of an IRA?[/i]

The money is actually 401(k) money. I’m very fortunate that my employer has a stock ownership plan, which has done well, but that ownership plan is in a 401(k). Generally it is better to sit on it, but I’m 33 with 750k in my retirement plan already.

4

Your access to 401K funds are extremely limited. Usually, an employee has no control over the 401K funds until the employment is terminated. When you leave the company, then your 401K administrator can help you “rollover” into a self-directed IRA.

Once you have funded a self-directed IRA, you can implement your investment strategy.

5

Congratulations BobSmith123,

May I suggest http://www.sageintl.com/

If your attorney does not know about these concepts you need to seek someome else.