Self Directed IRA – Education Costs
A client asked me a question out of left field. They have a Self Directed IRA and want to use a portion of the funds in the IRA to pay for real estate “education”.
At first I simple said this could not be done; however, on reflection I wonder. As investment expenses can be paid with IRA funds (commissions, fees, etc.) and as “investment education” outside of an IRA is a deductable expense their seems to be some logic in using self directed IRA funds to pay for investment education. What do you think?
Permalink Submitted by Alan Spross on Wed, 2008-06-11 23:45
I think your first response was on target.
The limited number of items known as “free toaster” exemptions that do not constitute taxable IRA distributions have been speficially authorized in various IRS rulings known as PTCE rulings. None of them address anything as indirect as education of the IRA owner.
There is also nothing inherently different about a self directed IRA in this respect. The education of the IRA owner could just as easily be applied to basic investment education used to fund a more typical IRA account. However, over the years none of these expenses have been ruled as payable out of the IRA without a reportable distribution.