Rental Property in an IRA and/or 401k

I have a friend, in his late 70’s, who has an IRA and 401k. He works full time and is taking RMD’s from the IRA. He wants the IRA and/or the 401k to purchase and own homes for each of his two daughters, who will then pay him rent. How does he go about finding a company willing to act as trustee or custodian for this, and who will make sure he avoids the many traps and pitfalls of a self-directed IRA or 401k owing rental real estate?



Hopefully, he will not find an IRA custodian because his daughters are “disqualified persons” with respect to his IRA. That means that renting an IRA owned residence to them is a prohibited transaction whether they pay him a fair rental value or not.

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