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About Entrust


For 40 years, The Entrust Group has provided account administration services for self-directed retirement and tax-advantaged plans. Entrust can assist you in purchasing alternative investments with your retirement funds, and administer the buying and selling of assets that are typically unavailable through banks and brokerage firms.


Partnering is the process of joining your SDIRA with other funding sources. This strategy allows you to leverage your SDIRA and makes it possible to invest in assets that might cost more than the funds you have in your account.

Partnering is often used for real estate transactions or any asset that requires significant capital.

People can also partner with others simply because they want to invest together on a project.

Who Can I Partner With?

You can partner your SDIRA with other retirement accounts, non-retirement accounts, and even personal funds. You can also partner with multiple funding sources at one time. You can partner your SDIRA funds with anyone, including yourself and other disqualified persons on a new transaction.

For example:

Spouses or any other disqualified persons, can partner their IRAs in order to purchase an investment property because the purchase is a new transaction. They could then partner their funds again later to purchase a different property, because the second house purchase would be another new transaction.

It is important to remember that partnering does not combine your funds into a single account. When your SDIRA is partnering with another IRA or account, the accounts remain individually-owned and the funds are not commingled.

How Does Partnering Work?

The amount each partner contributes to the purchase of the investment determines the proportionate percentage of ownership that each partner has in the investment. All expenses and profits must then be allocated proportionate to each partners’ ownership percentage.

What are the Tax Implications of Partnering?

Partnering may also have tax implications. While SDIRAs do not owe taxes, if you are partnered with a non-IRA funding source, that partner may owe taxes. Depending on the type of income the investment receives, your SDIRA may also be subject to Unrelated Business Income Tax (UBIT).
If you only partner two retirement accounts, it is unlikely that you will owe taxes. As with any investment, however, it is always advisable to consult with financial and legal counsel to understand the possible tax and legal implications.

Can I Use an LLC to Partner Funds?

Some investors choose to use an LLC when they partner their SDIRA with other funds. One advantage of this structure is that it allows you to create an operating agreement clearly outlining each partner’s ownership percentage.

  • If you form an LLC to partner your funds, you can only partner with yourself or another disqualified person during the initial partnering phase when you establish the LLC. After that, you have to avoid any prohibited transactions with disqualified persons.
  • If you use an LLC structure to partner your funds, you may be required by the IRS to file a partnership return.
    It’s important to consult with your financial counsel to see if this is required for your situation. It may be more likely if you have formed a multi-member LLC to invest or if one of your partners is not contributing tax-advantaged retirement funds.

How do I Partner my SDIRA Funds?

Use these steps to partner your SDIRA funds

Identify the partner

or partners you would like to invest with.

Perform your due diligence
Determine the initial investment each partner contributes

This percentage will be the ownership that each partner has in the investment. When purchasing real estate, the percentage of the property your SDIRA owns must be stated on the title when the transaction is recorded.

All investment income and expenses go through your SDIRA

As with all SDIRA investments, all income and expenses related to the investment must flow in and out of your SDIRA and not your personal finances. All income and expenses must also be allocated to the partners based on the proportionate percentage of ownership.


Your partnered funds are ready to invest


When the investment property is sold, your SDIRA receives a portion of the proceeds proportionate to the percentage of ownership.

Three Partnering Examples

Example #1

Partnering your SDIRA with your sister’s SDIRA


Your real estate investment property costs $200K

When property taxes of $1000 come due on the property, your SDIRA will pay $600 (60%) and your sister’s SDIRA will pay $400 (40%).

When rental income comes in, your SDIRA will receive 60% of the rental income, and your sister’s SDIRA will receive 40% of the rental income.

As with any SDIRA investment, the expenses and income flow in and out of the SDIRA and not personal funds.

Example #2

Partnering your SDIRA and your personal funds


Your real estate investment property costs $100K

When property taxes of $500 come due on the property, your SDIRA will pay $400 (80%) and your personal funds will pay $100 (20%).

The expenses and income that are related to the SDIRA (80%) will flow in and out of the SDIRA and the expenses and income related to personal funds (20%) will flow in and out of your personal account. But remember that the SDIRA funds and the personal funds must be kept separate.

Example #3

Partnering your SDIRA, your friend’s SDIRA, and your brother’s personal funds


Your private equity minimum investment costs $500K

(Three partners form a multi-member LLC in order to invest $500K)

When profits or dividends come in from the investment, they are paid to the LLC rather than the SDIRAs and personal account.

If profits of $50K are then distributed, your SDIRA receives $20K, your friend’s SDIRA receives $20K, and your brother receives $10K.

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