Invest in Commercial Real Estate With a Self-Directed IRA or 401(k)
Use Eligible Retirement Funds to Access Private Real Estate
Many accredited investors maintain substantial investment capital sitting in traditional brokerage accounts, former employer retirement plans, or low-yielding funds. While personal liquidity may be reserved for short-term operational or personal needs, tax-advantaged retirement accounts often represent an underutilized source of long-term capital.
By deploying eligible retirement funds into private commercial real estate, you can diversify out of public equities and access tangible, cash-flowing real estate assets—all while preserving or expanding the tax privileges of your retirement vehicle.
Can Retirement Accounts Invest With Bono Capital Group?
Yes. Subject to the terms of specific deal offerings and approval by an qualified custodian, self-directed retirement vehicles can invest directly into Bono Capital Group commercial real estate opportunities.
Because standard custodians (like Fidelity, Vanguard, or Schwab) generally limit investment options to publicly traded stocks, bonds, and mutual funds, placing retirement capital into private real estate syndications requires a specialized Self-Directed IRA (SDIRA) or Solo 401(k) custodian equipped to hold alternative assets.
Accounts That May Be Eligible
Depending on your current employment status and existing financial accounts, several self-directed structures can be utilized to invest with BCG:
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Self-Directed Traditional IRA: Funded with pre-tax dollars; investments grow tax-deferred until distributions begin.
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Self-Directed Roth IRA: Funded with post-tax dollars; capital gains and qualifying distributions grow and exit completely tax-free.
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SEP IRA (Simplified Employee Pension): Designed for self-employed individuals and small business owners, allowing higher contribution limits.
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SIMPLE IRA: A self-directed savings incentive match plan for small business owners and employees.
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Solo 401(k) / Individual 401(k): Tailored for self-employed business owners without full-time employees, offering high annual contribution caps and checkbook control.
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Former-Employer 401(k) Rollovers: Capital sitting in a 401(k), 403(b), or 457(b) plan from a previous employer can generally be rolled over into a Self-Directed IRA tax-free and penalty-free.
How the Investment Process Works
Investing through a retirement account follows a straightforward process:
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Confirm Offering Eligibility: Verify that the specific BCG offering accepts self-directed retirement investments.
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Establish a Self-Directed Account: If you do not already have an SDIRA or Solo 401(k), open an account with a qualified alternative asset custodian.
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Fund Your Account: Transfer capital from an existing IRA or roll over funds from a former employer 401(k) into your new self-directed account.
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Complete Custodian Review: Submit BCG’s private offering documents (PPM, Operating Agreement, Subscription Agreement) to your custodian for administrative approval.
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Direct Funding: Your custodian executes the subscription documents on behalf of your IRA/401(k) and wires funds directly from your account to the deal escrow.
What to Compare When Choosing a Custodian
Not all self-directed custodians offer the same fee structures, processing speed, or level of service. When evaluating potential custodians, review:
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Fee Structures: Compare flat annual administrative fees against asset-based percentage fees. Flat fees are generally more cost-effective for larger real estate allocations.
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Transaction & Document Fees: Ask about hidden costs for incoming wires, outgoing distribution processing, and annual property valuation updates.
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Processing Speed & Responsiveness: Private offerings often have strict funding windows. Choose a custodian known for fast document turnaround times.
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Alternative Asset Experience: Ensure the custodian routinely handles private placement real estate partnerships and LLC equity structures.
Important Rules and Limitations
Self-directed real estate investments are subject to strict IRS regulations. Key rules to maintain compliance include:
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Strict Arm’s-Length Transactions: The investment is strictly between the retirement account and BCG. Neither you nor "disqualified persons" (parents, children, spouses) can personally benefit, use, or occupy property held by the entity.
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Direct Cash Flow Routing: All investment capital must flow from the retirement account, and all passive cash-flow distributions or sale proceeds must return directly into the retirement account. You cannot deposit distributions into personal bank accounts.
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Prohibited Expense Payments: You cannot pay deal-related expenses out of personal funds; all capital calls or expenses must come directly from account reserves.
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Unrelated Business Taxable Income (UBTI): If the private real estate entity utilizes leverage (mortgage debt), a portion of income may be subject to UDFI/UBTI tax within the IRA.
*Bono Capital Group does not provide tax, legal, or financial advice. Investors should consult their legal counsel and tax professional before executing a self-directed investment.
Investing With Personal Funds Versus Retirement Funds
What BCG Provides to Your Custodian
To ensure a smooth approval process, Bono Capital Group coordinates directly with your custodian by providing a comprehensive closing package:
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Entity organizational documents and Articles of Organization
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Executed Private Placement Memorandum (PPM) and Operating Agreement
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Completed Subscription Agreement titled under your IRA’s exact legal name
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Official escrow funding and wiring instructions
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Annual property valuation updates required for custodian reporting
Frequently Asked Questions
Can I roll over an old employer 401(k)?
Yes. Funds from a previous employer’s 401(k), 403(b), or 457(b) can be transferred tax-free into a Self-Directed IRA. Active 401(k) plans with a current employer may also allow "in-service distributions" depending on plan rules.
Can I invest using a Roth IRA?
Yes. When investing through a Self-Directed Roth IRA, all capital gains, rental yield distributions, and equity growth exit completely tax-free upon eligible withdrawal.
How long does the funding process take?
Setting up a new self-directed account and moving funds typically takes 10 to 15 business days. Once funds reside in your self-directed account, executing a specific deal subscription takes 2 to 5 business days.
Can my spouse and I invest together or combine funds?
Each retirement account is an independent legal entity. However, two separate IRAs (e.g., your SDIRA and your spouse's SDIRA) or an SDIRA combined with personal cash can co-invest into the same offering as distinct fractional units.
Review Opportunities That May Accept Retirement Funds
Ready to explore current commercial and hospitality real estate opportunities suitable for your self-directed account?
*This material is for informational purposes only and is not an offer to sell or a solicitation of an offer to buy any security. Investing in real estate involves risk, including loss of principal. Past performance is not indicative of future results.