96k in an old 401k, an idle crew. Can I fund my own flips with it?

Take them in order.

Your own labor. You're a disqualified person to your own IRA. The rules bar transactions between the plan and a disqualified person, and providing services to plan-held property is one of those categories. Hanging a door yourself is the classic example people get warned about. Paying your own company to do the work is worse, because now money is flowing from the IRA to an entity you own. Whether a specific arrangement crosses the line is a question for an ERISA or tax attorney, and the penalty side is why people ask before rather than after: a prohibited transaction can disqualify the whole account as of the first day of the year it happened.

The meetup guy was right. Flipping is an active trade or business. Income from an ordinary-income business inside an IRA generates UBIT, filed on Form 990-T, and the filing kicks in above 1,000 dollars of gross UBTI. Trust rates get to 37 percent at roughly 16,000 of taxable income in 2026, so your 20k flip profit isn't sheltered in any meaningful way. Confirm the current numbers with a CPA, they move.

Custodian fees. Ask for the fee schedule and count actual events: purchase, every contractor payment, every draw, insurance, taxes, sale. Some charge per item. A renovation is dozens of items.

What your 96k actually fits, given all that, is passive stuff. Interest from lending doesn't trigger UBIT. You know rehab risk better than most lenders do. Funding somebody else's flip at 11-12 and 2 points, first position, is the version of your plan that survives contact with these rules. You just can't be the borrower or anyone close to you.

The part that got me when I looked at this years ago: it's not only you. Spouse, parents, kids, and entities you control are all in the disqualified circle. Your brother-in-law generally isn't. That surprises people in both directions.

harrow, the thing I'd hold onto from sextant's answer is that being good at renovation makes you a better note buyer, not a worse one. You can read a scope of work and tell if a borrower's 18k budget is a fantasy. Most passive lenders can't do that at all.

96k in my rural markets funds two small loans, not one flip. That's a real advantage, you get diversification instead of a single roof deciding your year.

Add one to sextant's list. If you lend from the IRA, the note and the security instrument have to be in the custodian's name for the benefit of your account. Not your name. I've watched a closing get papered wrong because the title company had never seen an IRA lender before and just typed the human's name in.

Also get the servicing question answered up front. Who collects the payment, and does it land at the custodian or in your pocket? It has to go to the custodian. Payment landing in your personal checking, even by accident, is the kind of thing you then have to explain.

I'm reading about notes right now and half of what I thought I knew just got corrected by this thread. So the interest is genuinely UBIT free? No form, no filing, nothing?

vellum, yes for straightforward lending. Interest is passive income and sits outside UBIT. Where people trip is if the IRA itself borrows money to make the loan, or if the lending volume gets big enough and organized enough that it starts to look like an active lending business. At three loans a year nobody's asking. A CPA should look at it if you scale to a real operation.

harrow, the other thing about lending: your money comes back. Flips inside an IRA also make you redeploy, but with a loan you know roughly when.

I'd push back gently on the enthusiasm here. Lending from an IRA is clean on taxes and completely exposed on credit. If your borrower stops paying, the IRA forecloses, and now the IRA owns a half-finished house it can't send you over to fix. Think about that scenario before you write the first check, because it's the one that actually happens.

What's your plan if a borrower goes dark at 60 percent complete?

Let me check harrow's numbers because nobody has. Buy at 72, rehab 18, that's 90 all in against a 96k account with zero reserve for the custodian, for taxes during the hold, for insurance, or for the 4k of overage that every cosmetic flip finds. Then out at 122 minus 7 percent selling costs is about 113. So 23 gross, and then UBIT on it as an active business.

It's a tight plan even before the compliance problem kills it. The lending version at 11 percent on 90k is roughly 9,900 a year with no filing, no overage, no realtor. Less exciting, doesn't need your crew.

ledger's selling costs number is the one that always gets left out of meetup math.

Worth asking what happens to your crew in this plan. You said they're idle three weeks a month. Funding somebody else's flip doesn't fix that, it just makes your retirement account money. Those are two separate problems and this thread solved one of them.

lantern has it. harrow, could you do the flips personally with hard money the way you already do, and use the IRA for lending on deals you're not touching? Then the crew stays busy and the retirement money stays boring.

Is there anything stopping him from lending IRA money to a flipper he also does GC work for? Genuinely asking, that seems like it could get murky.

beacon, that's the kind of question where you pay someone for an opinion in writing. The rules also cover indirect benefit to a disqualified person, and "I lend you my IRA money and you hire my company" is close enough to the line that I wouldn't want to be the test case.

Reading this as somebody still picking a lane, the useful part isn't the IRA. It's that harrow already has a skill that most capital doesn't have, and the tax wrapper is a second question. Sorry, that's not helping with the 96k decision.

I didn't know any of this existed a week ago. Saving the whole thread. The 37 percent at 16,000 number is wild for something people call a tax shelter.

harrow, one more before you move anything. Rolling a 401k to an IRA can change what protection the money has in a bankruptcy or a lawsuit, and that varies by state. Ask about it before the transfer, because it's much harder to undo afterward.