How many times have you heard that statement? I used it in another way this weekend when
the rear brake on my bike would not operate properly. I said to the manager of the local bike shop,
“I have an easy adjustment on my brake. Can
you fit me in”? I knew as soon as it
came out of my mouth that it was the wrong thing to say.
I answered a “quick question” this week. Two friends want to purchase a piece of prime
property for sale in our neighborhood.
Each has an available retirement balance and if combined, they could
purchase the parcel for cash. They
wanted to know if it was possible to use their retirement funds for this type
The quick answer to the quick question was yes. End of story? No.
Partner 1 had his retirement investment in a solo 401K I had
helped him set up a few years ago. He
was ready to write a check for his part of the deal. Partner 2, as it turned out, had his
retirement funds in an IRA brokerage account.
He thought he could just call his broker and have the funds available
for the purchase. Wrong again. He
learned he would need to cash out his investments and transfer the cash to a
custodian for the transaction. Only a
custodian could hold his paperwork for this kind of transaction.
This transaction may go away because Partner 2 will not be
able to access his funds in a timely manner.
Another Ready – Fire – Aim transaction.
If you are planning to use your retirement to fund one of these
so-called alternative transactions, you need to get ready. Find a custodian and get your IRA funds transferred. Better yet, if you are self-employed with no
employees, for a solo 401K and get
checkbook control of your retirement funds.
We prepared a strategy to have each retirement account,
along with the personal funds of the two partners to be invested as tenants in
common. Each would own their relative
percentage of ownership, depending upon the amount each invested.
The quick question turned into an hour long session of
details and alternatives!