Is performing repairs on properties owned by my retirement account prohibited?

Yes. You should hire property managers or handymen to manage day-to-day and long-term improvements. Performing repairs is considered a prohibited transaction.

Repairs done to any Self-Directed Solo 401(k) Trust or Self-Directed IRA owned property must be carried out by a third party.

The general rule of thumb is that you must maintain an “arm’s length” from any assets owned by your plan. Any direct work done by you to the property will be seen as providing benefit to the plan, resulting in a violation of IRS rules.

We recommend hiring a property manager to perform repairs on your properties. If you're an account owner using a Rocket Dollar Self-Directed IRA with an LLC or trust, you can hire the property manager and arrange payment from your LLC business or trust bank account.

You can even use a debit card connected to the LLC/trust bank account to make payments associated with the property, such as taxes, insurance, and maintenance.

Want to read more?

• Want to invest in an authorized real estate option? Here are the key factors that you should consider before choosing an investment property.
• Was your original intent a prohibited transaction? Why you should still consider investing in real estate.
• An overview of the different types of real estate assets: A Minute With Dan (Video).

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