Say that three married couples want to invest in real estate together. They can form an LLC or limited partnership for that purpose. As always, it is wise to have a buy-sell agreement between the parties.
Imagine further that three of the spouses have 401(k)’s that they would like to invest in this new real estate venture. With the In-Marriage QDRO, each spouse can transfer some 401(k) money to the other spouse and then invest in a self-directed IRA that would purchase the real estate.
Because no one married couple owns 50% of the LLC or limited partnership, the entity can borrow money in order to purchase the real estate. The loan, however, must be a non-recourse loan. For that reason, a larger than normal down payment will probably be required. If only one married couple wanted to invest in real estate via a self-directed IRA, the purchase would have to be for cash and no leverage.
An In-Marriage QDRO allows a married couple to directly buy real estate. That option is not available as a 401(k) choice.
I’m the only Nebraska attorney who knows how to do an In-Marriage QDRO. The application described above is one of many that an IMQ can accomplish for a happily married couple.
