Partnering Your IRA Funds with Other IRAs to Invest

Partnering funds to invest is not a new practice. Many investors pool funds for a few reasons. Doing so decreases an investor’s liability should the venture run amok. Partnerships also help individuals acquire lucrative assets they’re unable to alone. This maneuver can also work in terms of partnering your IRA funds with other IRAs to invest.

Often, people with self-directed IRAs use their retirement funds to partner with their own funds or even with another individual’s personal capital to invest. As more people begin to understand how powerful self-direction is, they become more familiar with a few of the lesser-known benefits these accounts present. One of those benefits is the ability of partnering your IRA funds with other IRAs to invest.

How Does Partnering Your IRA Funds with Another IRA Work?

Well, it works in exactly the same way partnering does in any realm:

  • The partnered IRAs involved take on the percentage of their stake in the asset.
  • If your IRA funds 60 percent of the acquisition, the other IRA takes on 40 percent.
  • Income and expenditures are allocated accordingly.
  • Your IRA gains 60 percent of the income, as well as pays for 60 percent of all expenses.
  • It also incurs 60 percent of any potential losses.

And, here’s something that sweetens this deal even more: your IRA can partner with more than one IRA.

Partnering with Multiple IRAs

This opens the door for many possibilities, especially if your self-directed retirement plan has limited funds. Partnering helps leverage your buying power and allows you to take part in purchases that hopefully produce a high ROI—thereby increasing your capital for future investments.

The more IRAs that participate in a partnership, the more the bullet points in the section above matter. The-more-the-merrier cliché applies here in an oxymoron-ish kind of way, because multiple IRA partnerships decrease two things (which balance each other out):

  1. The gains produced by the investment are commensurate with the percentage spread. This means your IRA only reaps the rewards of the percentage it owns. Don’t let this scare you, though. The more buying power you have, the bigger the investment potential.
  2. Multiple IRA partners also decreases the liability your IRA suffers should the investment prove to be a dud. So, while your earning potential isn’t as great as it is when you own the whole asset—your losses won’t be so devastating, either.

As you can see, there are a few perks to partnering your IRA funds with other IRAs to invest.

It’s also important to seek advice from a financial professional such as your CPA or an attorney. These people can help you navigate some of the complexities that partnerships sometimes encounter. They can also ensure the partnerships are structured properly to protect your hard-earned retirement funds.

If you’re interested in learning more, contact Advanta IRA. Our team serves many clients who participate in partnering their IRAs with others to invest. We are always glad to further your education and help you reach your full investing potential within your self-directed IRA.

About Jack Callahan

Jack proudly earned his bachelor’s degree in finance and multinational business from Florida State University and his law degree from the University of Florida College of Law. He established Advanta IRA in 2003 and has steadily nurtured and grown the company and the team every year since. Prior to founding Advanta IRA, Jack delivered specialized counsel to real estate investors, small business owners, and real estate professionals on tax, legal and financial matters. As an industry expert, Jack is a frequent speaker on self-directed retirement plans. He is an accredited continuing education instructor for the Florida and Georgia Bar Associations, Florida and Georgia Real Estate Commissions, and The American Institute of Certified Public Accountants.