self-directed SEP IRA in real estate
I have a client who held real estate in an LLC, funded by her SEP IRA. She recently sold the real estate for $317K and wants to move the funds into her existing SEP IRA at TD Ameritrade. The cash is currently sitting at Chase Bank in her LLC account. The custodian states that this money cannot be transferred because the accounts are not like-titled. However, I was told a month ago that she should get a check from the bank and have it pay to the order of TD Ameritrade FBO account name and number. In the check memo section, it should state that this is a “direct trustee to trustee transfer of SEP IRA funds”. Since I’m getting conflicting information, I am reaching out the experts here. I was not involved in setting up this self-directed SEP IRA. Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2020-12-10 22:46
The SEP IRA owns the LLC, which is an investment in the IRA. The checking account is titled to the LLC and therefore not titled the same as the SEP IRA to receive the transfer, so the transfer cannot be done. The funds must be moved from the LLC checking account to the SEP IRA which owns the LLC. From there, a non reportable direct transfer to the TDA SEP IRA should be possible. The Self directed IRA custodian is therefore correct.