MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The REAL Limit on IRA Investing

25 Dec 2025 · 1 min

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1:02

In this segment, Mark Kohler explains that the primary limitation on IRA and other retirement‑account investing is not the type of assets you can hold, but the parties you may transact with. He outlines the “lineal rule,” which bars any direct or indirect personal benefit from IRA‑owned investments. Using concrete examples, he shows that an IRA can purchase a rental property or run an Airbnb, but the account holder, their children, parents, or spouses cannot live in, rent to, or otherwise use the property. Likewise, an IRA‑owned business may hire employees, but it cannot employ the account holder or family members, and the account holder cannot personally perform rehab work on an IRA‑owned fix‑and‑flip. The overall message is that while retirement accounts can engage in a wide range of lucrative investments, they must avoid any self‑dealing or benefits to lineal relatives.

Chapters

It's not so much what you can't invest in, it's who you can invest with or what deals your IRA can do. It's prohibited parties more than prohibited assets. For example, you could buy a rental property for your kids at college, rent it to their roommates, blah blah, blah. Wonderful tax strategy. Do it all the time. But if your IRA buys the rental property, which it can do, and we've got clients that buy rental properties every day in their retirement account and get an incredible roi, they just can't rent it to their own children, they can't rent it to their parents, and they can't use it either. So if your IRA buys an Airbnb, you can't go stay at it, but it can make great money doing an Airbnb. You can't start a business with your Roth IRA or your 401K and then hire a family member or hire yourself. But you can hire others. You could do a fix and flip. You just can't be the one doing the rehab. So your retirement account can do all these incredible investments. It's just you can't try to benefit it somehow by you using it, getting paid, or, or your children or parents and their spouses. That's lineal rule.