| Step | What Happens |
|---|---|
| 1. The Offer | Contract is written and signed in the plan entity's name |
| 2. Earnest Money | Deposit wires directly from the plan's bank account |
| 3. Pre-Closing Costs | Inspections, appraisals, and fees paid from the plan |
| 4. Closing | Title vests in the plan entity; funds wire from the plan account |
| 5. Ongoing Money Flow | All income and expenses move through the plan account |
Your plan entity is always the buyer
Before writing a single offer, you need to be clear on who the purchasing party is. For an IRA LLC or IRA Trust plan, that's the LLC or trust. For a Solo 401(k), that's the plan trust. Your retirement plan entity is the legal buyer, the titleholder, and the party to every contract. You act on its behalf, not as a buyer in your own right.
This distinction matters at every stage, and getting it wrong at any point can create a prohibited transaction under IRC Section 4975.
Step 1: Making the offer
The purchase contract must be written in the name of your plan entity, not your personal name. If you're using an IRA LLC, the buyer is the LLC. If you're using a Solo 401(k), the buyer is the plan trust.
You execute the contract yourself, but in your capacity as the entity's authorized authority. For an IRA LLC, you sign as Manager. For a trust structure, IRA Trust or Solo 401(k), you sign as Trustee. The signature block should reflect that role clearly: "Mark Wilson, Manager" or "Mark Wilson, Trustee," rather than just your name alone.
Your real estate agent needs to understand this before offers are written. It's worth a brief conversation upfront; most experienced agents have worked with investor entities and won't find it unusual. For signature block formats by plan type, see How do I sign contracts as Manager or Trustee?.
Step 2: Earnest money
The earnest money deposit must come from your plan's bank account, not your personal funds. Paying the EMD personally and planning to reimburse yourself later isn't a workaround; it's a prohibited extension of credit from you to the plan under IRC Section 4975, with potential consequences for the entire plan.
This is where Checkbook Control earns its name. With your plan's dedicated checking account, you can wire the deposit immediately, the same day you need it. There's no form submission, no custodian approval process, and no processing window. You have the same speed and flexibility as any all-cash investor. See How do I handle Earnest Money Deposits (EMD)? for the quick-reference version of this rule.
Step 3: Pre-closing costs
All costs associated with the transaction prior to closing, inspections, appraisals, environmental reports, title fees, must be paid from plan funds using the same logic as the earnest money. Keep your personal finances completely separate from the transaction.
If you're using a non-recourse mortgage, your lender will require a formal appraisal at this stage. Ensure the order is placed in the entity's name and the fee is wired from the plan account.
Step 4: Closing
At closing, title vests in the name of your plan entity, exactly as it appeared on the purchase contract. The plan's tax identification number, the EIN associated with the LLC, trust, or Solo 401(k), should be on file with the title company and reflected in the closing documents.
You attend and sign the closing paperwork in your authorized capacity, Manager or Trustee. The purchase funds are wired directly from the plan's bank account. There's no need to route anything through a third-party custodian; Checkbook Control means the transaction is entirely within your control.
Retain all closing documents, the HUD-1 or closing disclosure, the deed, any title insurance policies, in your plan's records. These are your plan's records, not yours personally.
Step 5: Ongoing money flow
Once you own the property, the financial discipline continues. Every expense, property taxes, insurance, HOA fees, maintenance, repairs, property management fees, is paid from the plan's bank account. All income, rent, lease proceeds, sale proceeds, flows back into that same account.
You cannot pay an expense personally and be reimbursed. You cannot deposit rental income to your personal account and transfer it over later. All money in and out of the investment must move directly through the plan. This isn't a technicality; it's the operational boundary that keeps the investment inside the tax shelter.
What if your plan isn't set up yet?
If you find a property before your plan is in place, you face a genuine constraint: you can't write an offer in an entity name you don't have yet, and you can't wire earnest money from an account that doesn't exist.
There are two legitimate workarounds. First, a trusted third party who is not a Disqualified Person, a fellow investor, your real estate agent, a neighbor, can lock up the contract with the right to assign it to your plan entity once established. Second, once your plan entity name is confirmed, which typically happens within a few days of your application, the plan can borrow funds short-term from a non-Disqualified Person to cover pre-closing costs while the plan funding transfer is in process.
Both approaches require genuine arm's-length transactions. You cannot personally lend money to a third party and have them lend it to your plan. In most cases, the simplest path is to get your plan established and funded before pursuing deals; it removes the complexity and the risk entirely.
Frequently Asked Questions
Can I back out of a deal if my plan funding doesn't arrive in time?
You can, but the earnest money held in escrow is at risk according to the terms of your purchase contract. Timing is the most common source of stress in pre-funded deals. If you're actively pursuing properties, having your plan established and funded in advance is the cleanest approach.
Does the title company need any special documentation from my plan?
Most title companies will want to see the operating agreement (for an LLC) or trust agreement, along with the plan's EIN. Have these documents ready before closing. Some title companies will also want confirmation that the entity is authorized to purchase real property; your plan documents cover this, but it's worth confirming with the title officer a few days in advance.
Can I use a personal check for a small expense like an inspection if I reimburse myself later?
No. Reimbursement from the plan to you constitutes a distribution and potentially a prohibited transaction. Every expense related to plan-owned property must originate from the plan's account, regardless of size. Keep a modest operating balance in your plan's bank account to cover incidental costs.
What does the deed look like for an IRA LLC-owned property?
The deed should name the LLC as the grantee, for example, "Sunset Property Holdings, LLC." Avoid titling in your personal name. Property titled in your own name rather than the entity's name can be interpreted as a personal asset by the IRS, with significant tax consequences.
Next Steps
An investor ready to make an offer can use the Plan Finder to confirm the right plan structure is in place, or review Types of real estate you can own to see the full scope of what a plan can buy. For a condensed, checklist version of this same process, see What is the workflow for buying real estate?.