IRA Mortgage Investments

[Guest Liell]

I have several mortgage investments in my Roth-IRA. Can I use my Roth-IRA for a loan to someone interested in buying a house from me?

[Guest b2kates]

I think not. I am familiar with a case where the DOL determined it was a PT for a plan administrator who was also a builder to have the pension plan issue mortgages to buyers of the houses he built.

Case became a criminal matter for failure to disclose on the 5500.

[John G]

Your proposal is unlikely to be allowed. Here is why. You could sell a property below market value to Mr X and arrange a very beneficial mortgage that subsequently pumps extra dollars into your IRA that could never happen if you were not self dealing. Congress has set a limit to what you can contribute to an IRA and the IRS could readily presume that an arrangement that puts more tax free money into your IRA is fraud.

If you want a fixed income return, try a bond fund or own individual publicly traded bonds bought on an open market.

[mbozek]

Not if you are the fiduciary for the IRA because you would be dealing with IRA assets for your own interest or account. However, if another person, e.g., an independent fiduciary, made the decision to use plan assets for such an investment then there would be no PT. But I dont know where you would find such a person who is truly independent.

[Guest Liell]

Thank you for the information. I will stick with something acceptable to Uncle Sam.