Investing

How to Defer Taxes While Using IRA Funds for Real Estate or Business Opportunities

The problem with just cashing out

Withdrawing IRA funds outright means income tax on the distribution and, before 59½, a penalty on top — often surrendering a third or more of the money before it is ever invested. The planning question is how to deploy retirement capital without that haircut.

The structures that exist

Keeping the investment inside a self-directed IRA avoids distribution entirely — the account owns the asset and returns flow back untaxed until withdrawal. Rollover-as-business-startup (ROBS) structures can fund an operating business, with strict compliance requirements. Sixty-day rollovers offer a narrow, once-per-year bridge. Each has real rules, and the failure mode of each is the same: the whole amount treated as distributed, taxed, and penalized at once.

Handle with professional supervision

These are among the most fact-specific moves in personal tax planning, and the cannabis angle — custodian policies, federal status, UBIT — adds another layer. The original version of this article said to call before you act; six years later that is still the entire advice. The unwinding costs of a botched structure dwarf the planning fee every time.

This article is general information, not tax advice.