So long as the lender has no recourse against the account-holder in the event of default, a Checkbook Retirement Plan may borrow funds to finance investments. If the lender has recourse against the account-holder, meaning the account-owner could be personally liable for the debt, an extension of credit prohibited transaction has occurred. In the case of a Checkbook IRA, leveraged real-estate deals may result in UDFI tax (Unrelated Debt Financed Income tax) when a nonrecourse loan is used. One of the great benefits of a Checkbook 401k is that real estate acquisition indebtedness does not result in UDFI.