My IRA and I both want into the same LP. Where's the line?

The fee tier point is exactly where I've seen sponsors create the problem without meaning to. Class A units at $250k combined, better waterfall, and someone happily lists their IRA plus their trust plus themselves on one signature page to get there. Nobody's trying to cheat, they're just filling out a form.

Naive question on the mechanics: the K-1 arrives addressed to the IRA, and then who actually signs and files the 990-T? Does the custodian do it or do you hand them a return?

@solder most custodians will file it if you engage them, some outsource it, and either way they charge for it. The numbers I've been quoted for prep run a few hundred to over a thousand depending on complexity. The custodian signs as the account's fiduciary, but they don't prepare it out of the goodness of their heart and they don't check your K-1 for you.

Genuinely asking why you'd put the IRA into the leveraged deal at all rather than the taxable money. Interest and rent flow into an IRA clean. Agency debt is what drags UBTI in. Flip the two allocations and the IRA holds something passive while the personal money takes the leveraged deal, where you at least get depreciation you can use.

@verity depreciation is the part I'd underline. Inside the IRA the losses do nothing for you, they just reduce the UBTI figure. Outside, they're on your return. Putting the leveraged asset in the account that can't use the shelter is the standard complaint about SDIRAs in equity deals.

Compass, does the PPM even permit IRA subscriptions? Mine had a section limiting benefit-plan investors so the fund stayed under the 25 percent threshold, and above that the whole fund gets treated as holding plan assets. If they're near the cap your $150k might not be welcome regardless of what you decide.

@thatch that clause is in most of the ones I read, and sponsors track it closely. Worth asking the investor relations person directly how much room is left under it, because if they're at 22 percent and you're a large ticket they'll tell you no and you'll have burned two weeks.

On the original question, the thing I'd want in writing from the sponsor is that the two subscriptions get treated as unrelated investors for every economic term. Same price, same class, no combined-commitment credit.

Is there any version where a sponsor sets up a feeder or a blocker so IRA money avoids the UBTI entirely? I've heard the term but never seen one in an offering.

@beacon a corporate blocker pays entity-level tax so the income arriving at the IRA is a dividend rather than debt-financed income. You don't dodge tax, you swap who pays it, and the arithmetic sometimes comes out worse. REIT structures work differently again and that's where I lose the thread honestly.

The $180k number is the one I'd stare at. If $150k goes into a five to seven year illiquid LP, you've got $30k of dry powder in that account for the 990-T bill, the custodian's fees, and any call. That's thin for a deal that plans to refinance.

Two more clauses to pull. Whether the LP can require additional capital at all or only offer it, and what the default remedy is, because "dilution at a punitive rate" and "forfeiture" are both out there and they're very different for an account that structurally cannot write a check from outside. Also check whether transfers of the IRA's interest need GP consent, since if the IRA ever has to raise cash the interest may be unsellable by design.

This whole thread is a decent argument for keeping retirement money in things that just pay interest.

One clause I'd read three times in the subscription agreement: the tax indemnity. Some of them have the investor agreeing to hold the GP harmless for any tax reporting the investor's own status causes, and a couple I've seen go further and say the GP has no obligation to provide the information needed for a 990-T beyond the standard K-1. If your UBTI number depends on the average acquisition indebtedness figure and the GP won't commit to reporting it, your preparer is guessing, and the account pays for the guess. Ask them for a sample K-1 from a prior fund with the debt-financed income lines filled in. If they can't produce one, that tells you something about how they handle IRA investors.