Change to self-directed after SEPP started? And real estate…

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L1: Change to self-directed after SEPP started? And real estate…Hello! DOB: 23 June 1962. New SEPP, need firstdistribution this year. Total in IRA: $400k.Ok, I’m interested in both starting SEPP *and* converting to a self-directed IRA, principally so that I can invest in real estate. Several questions:Can I start the SEPP now, and then convert (probably next year) to a self-directed? It would seem logical that the two are independent.Concerning investing in real estate, I understand the rules concerning no self-dealing. I’ve also read the comments here on why real estate in an IRA might be a bad idea — can’t get a loan, and capital gains taxed heavily, to summarize. However, I think there might be ways around those things. First, for loans, the real estate can be owned by an LLC, and then the IRA holds shares of the LLC. The LLC can definitely get loans. This also off-loads IRA overhead, because the portfolio of property within the LLC can change, and nothing changes for the IRA except the value. Also, an LLC allows for other investors to buy into the real estate as well. For taxes, what if it’s a Roth IRA? In that case, all the capital gains should be completely tax free. It’s just income. Yes? Comments?Finally, the real complexity might be running the SEPP for 5 years… Logically, you should be able to distribute an equivalent number of shares of the LLC, but seems complicated unless the IRS has a solution for this? Anyone know if this is possible? Otherwise, I could leave 5 years worth of cash in the IRA and not invest that part in real estate. Alternatively, the LLC could make “profit” distributions back to the IRA. Rental income, for example.Any thoughts on (experience with) the above? Many thanks in advance!2017-09-28 16:13, By: cmd, IP: []
L2: Change to self-directed after SEPP started? And real estate…Very innovative. I have not heard that idea before. I lecture against self-directed IRA investments because of all of the reasons you already know.
I would be most concerned about the fact that it is unique, and might cost $ 10,000 or more to get the IRS to understand it, or to get a PLR (Private Letter Ruling). Since you are only 57, you will probably sell it before you are 70, so you won’t have the issue of annual valuations for RMD. You know that you will probably need cash for your annual SEPP 72-T distributions, and will be providing accordingly. Otherwise you will need annual appraisals in order to determine the FMV of the LLC shares., which the IRS could challenge.2017-09-28 19:20, By: dlzallestaxes, IP: []