Purchase or Sell Interests in Limited Partnerships in a Self-Directed IRA
It is permissible to invest in partnerships in a self-directed IRA.
A partnership is a type of unincorporated business organization in which multiple individuals, called general partners, manage the business and are equally liable for the debts of the business.
Other individuals, called limited partners, may invest in the business but are not directly involved in management. Limited partners are liable only to the extent of their investments. Unlike a limited liability company or a corporation, partners share equal responsibility for the company’s profits and losses, and its debts and liabilities.
The partnership itself does not pay income taxes, but each partner has to report their share of business profits or losses on their individual tax return. Estimated tax payments are also necessary for each of the partners for the year in progress.
General rules regarding partnerships in a Self-Directed IRA
- The partnership agreement must permit an individual retirement account or a qualified plan to be a partner.
- The partnership must comply with the appropriate state law, have a determinate life, and be assignable.
- The partnership subscription agreement must be signed by you as having been read and approved, and will be executed by IRA Innovations for your benefit.
Partnerships may be subject to unrelated business income (UBIT) and other taxes. It’s important to consult your tax advisor for proper direction.
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