Episode #299 — One of the most common questions I receive over at SelfDirected.org when somebody wants to buy an asset in their IRA is this: “Bryan, can I buy [insert asset name here] in my name and then transfer it to my retirement account?” I get this question a WHOLE LOT about bitcoin and about real estate. There’s a very definite, unambiguous answer to this, and I’ll share it with you right now. I’m Bryan Ellis. This is Episode #299.
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If I had a nickel for every time I heard somebody ask me whether they can buy something in their own name and then transfer it to their IRA, I’d have… well, a really big pile of nickels.
This is coming most frequently these days from folks who want to buy cryptocurrencies in their IRA or 401k and who are having a really difficult time structuring the transaction so as to take direct ownership of the Bitcoin or whatever directly through their retirement account.
So I’ll clarify this for you today, and help you to understand the WHY behind it as well.
As I do so, you’re welcomed to join today’s discussion by telephone toll free at (833) SDI-TALK, by email at [email protected], or best of all, visit the resource page for episode #299 which is at SDITalk.com/299.
So here’s the short, unambiguous answer to whether you can buy an asset in your own name and then transfer it to your IRA or 401k: NO. NO. NO.
Lest I lacked clarity, how’s this: NO, niet, nein, non, nao, NO! Negative, bucko.
Here’s the deal…
There’s this thing called “legal title”. That’s a fancy term, but it’s essentially the same as saying “whose name is this in”. A house, for example: “Whose name is this house in?” The answer to that question indicates who holds “legal title”.
Legal title just means “who owns it” under the law.
So here’s the issue with buying something yourself and then transferring to your IRA or 401k. Let’s take a house, for example:
If you buy a house, there’s going to be a deed that says you bought it. If I’m the buyer, it will list “BRYAN ELLIS” as the grantee… that means somebody transferred the deed to me.
In order to transfer that house into my IRA or 401(k), a new deed would have to be created, in which I as the owner transfer that property out of my name and into the name of my retirement account. If my IRA is with the Super-Duper IRA Company, then the deed would indicate that I, Bryan Ellis the PERSON am transferring ownership of the property from my name into the name of Super-Duper IRA Company For the Benefit of the Bryan Ellis IRA.
What we have there is a clear change of title from me to my IRA. So what’s the problem with that?
The problem is that it’s totally prohibited, and not ambiguously so. That’s because doing business – transferring assets – between your IRA and certain types of people is just not allowed in your IRA… as in, if you do it, you’re going to lose, almost certainly, a minimum of 40-60% of your entire IRA in taxes, penalties and interest.
Unfortunately, where your IRA is concerned, YOU are absolutely one of those certain types of people, as is true for most of your family and practically all businesses or organizations in which you have substantive ownership or control.
So if the question is CAN YOU transfer assets from your own name to your IRA or 401(k), sure you can… but you’d be insane to do so. There’s just no ambiguity about this whatsoever.
And for you cryptocurrency types who think you’re going to be smarter than everybody else and claim something like “the cryptocurrency was never really tied to my personal name, so I can do this”… sure, you can do it, but you’re going to get slaughtered, and the IRS will show no mercy whatsoever. And I guess, really, they shouldn’t… they’ve made the rules on this very clear.
So that’s that, my friends. NO, you can never transfer assets directly from your name into your IRA except for cash properly deposited with your custodian. That’s it.
I always like to provide creative solutions whenever possible, but this is one of those places where the rules are the rules, and they’re as black and white as can possibly be.
That’s it for today, my friends. And hey… once again, if you like this show, PLEASE stop by iTunes and give us a 5-star rating and write a nice review for us. It really helps us to get more exposure for this show, and that’s what keeps us going.
My friends, thank you for tuning in today and remember: Invest wisely today, and live well forever!