Investing Through Retirement Accounts: SDIRA and eQRP

Most people assume their retirement account can only hold stocks, bonds, and funds. In fact, certain account types let you invest in private real estate, so your share of cash flow and gains can grow tax-deferred or even tax-free. Two structures come up most often.

The self-directed IRA (SDIRA)

A self-directed IRA is a traditional or Roth IRA held at a custodian that permits alternative assets, including real estate syndications. You move or roll existing retirement funds into the SDIRA, then direct it to invest as a limited partner. Distributions and gains flow back into the IRA under its usual tax rules.

The eQRP and Solo 401(k)

Business owners and the self-employed may use a qualified retirement plan (often marketed as an eQRP) or a Solo 401(k). These can offer higher contribution limits, checkbook control, and, in some cases, relief from a tax that affects leveraged real estate inside an IRA. The right fit depends on your situation.

The watch-outs

Real estate held with a mortgage inside an IRA can trigger UBIT/UDFI, a tax on the debt-financed portion of income. Plan structures can reduce or eliminate it. There are also rules against “self-dealing.” None of this is a reason to avoid retirement-account investing; it is a reason to set it up correctly.

We are not tax or legal advisors, and this is not advice. Talk to a qualified custodian and your CPA before moving retirement funds.