Yes, move the pension money into a self-directed IRA and buy the property within the IRA.

I think it can be done, just not sure why you would want to. Maybe Skip can comment on his motivation.

There might be ways that this can be done.

But why?

Here's my thought.....

If you were financially ready to move away from generic "retirement savings" and into "real estate investing" ......

then you would probably have the money saved outside of your retirement accounts.

CPA here. This sounds like a bad idea. There are ways to minimize the hit but if you simply pull the money out to pay for something you're looking at income taxes (at least at your marginal rate and if you pull out enough you may even get some of it taxed at the next bracket) + 10% penalty.

Basically, you're saying that you can do better with that investment property than whatever you're invested in currently (hopefully broad market index & some broad bond index or thereabouts) + your marginal tax rate + the penalty. If you're really that good at picking investments then go ahead. If not, I'd look at alternative sources of funds.

What about investing in an LLC or LP that owns the property with the IRA funds? The LLC entity should get normal tax treatment for property and the investment into the LLC would be treated as retirement funds, no?

A custom kitchen is what sells the house.