The sponsor offered me a referral fee on the deal my SDIRA wants into

verity, that's fine as a decision but halyard's actual question was whether the two things interact, and I'd like to know too. I've heard the phrase "indirect benefit" thrown around at meetups and nobody ever explains what it means in practice.

The self-dealing rules cover a fiduciary dealing with plan income or assets in his own interest. You're the fiduciary of your own IRA. So the question a lawyer would work on is whether the fee is compensation for a separate service to the sponsor, or whether it's a benefit you're getting because your IRA is in the deal. Those look different on paper and can look identical in a room.

I'd want it in writing from a professional before wiring, not after. That's not me being cautious for sport, it's that the consequence lands on the entire account rather than the position.

I've been through this twice and I'm still catching up. Does the account really blow up over something like this, or is it a penalty on the amount involved?

juniper, an IRA that engages in a prohibited transaction can lose its status as of the first day of that tax year, which means the whole thing is treated as distributed. Traditional account, that's ordinary income on the full balance plus a penalty if you're under 59 and a half. The exact treatment is a tax professional's call, but that's why people here get twitchy about it rather than shrugging.

halyard, refuse the fee and stop thinking about it. 5k.

Dumb question I'd be embarrassed to ask out loud: could he just have the fee paid to the IRA instead of to himself? Then it's not going to him personally.

compass, that's worse, not better. Now the IRA is receiving compensation for services, and services performed by the account holder for the benefit of the account is right at the center of what's prohibited. Also a fee for raising capital paid to anybody unlicensed has the securities problem halyard already flagged, and routing it through a retirement account doesn't clean it.

The securities piece is the one I'd sort out first honestly. A real estate license lets you sell real property. LP interests in a syndication are generally securities, and transaction-based compensation for selling securities is a registration question. Sponsors offer this to people constantly and most of them have no idea what they're offering. Ask the sponsor whether his securities counsel has approved paying finder fees, and watch what happens to his face.

girder's test is good. I asked a sponsor a version of that once and got a long pause and then "our attorney handles all that." That's an answer.

Separate from the fee, is 100k of 142k into one deal the position you want? That's 70 percent of the account in a single sponsor and a single 42 unit property. The fee question might be doing you a favor by making you slow down.

wren said the thing I was building up to. halyard, the concentration is a bigger number than the 5k either way.

One more mechanical item: check the subscription docs for how they handle tax-exempt investors. If there's fund level debt, part of your income comes through as debt-financed and gets taxed inside the account, and you'll need a 990-T. Some sponsors will tell you the UBTI figure from prior deals if you ask, some have never been asked. Worth knowing before you're 70 percent in.