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Multiple vs. Single Member LLC, Bitcoin IRA and more | Client Q&A

AdMail Podcast

In this week’s episode, IRA Financial’s Adam Bergman Esq. answers questions about the Bitcoin IRA, multiple vs single member LLC and the difference between investing with an LLC or directly through your IRA custodian.

Question 1 from David H in New York, NY: What is a Bitcoin IRA and is it the same as a Self-Directed IRA?

You won’t find the term Bitcoin IRA in the IRS Code. In fact, you won’t find Self-Directed IRA there either. Really, all IRAs are “self-directed,” meaning you choose what you want to invest in. However, your investment choices are limited, depending on the custodian of your IRA. A truly Self-Directed IRA places no limitations on the investments you can make (except for those prohibited by the IRS).

The “Bitcoin” in Bitcoin IRA is essentially an adjective. It’s describing what type of investments you are making with your IRA. If you invest in real estate or gold, you might use the term Gold IRA or Real Estate IRA. Just because you are investing with a Bitcoin IRA, doesn’t mean you strictly have to make Bitcoin investments with it. With an IRA Financial Self-Directed IRA, you can use one plan to invest in Bitcoin and other cryptos, real estate, tax liens, anything you can think of.

Not all IRA custodians will allow this. They may offer a Self-Directed IRA, but not allow you to invest in Bitcoin. Make sure your custodian allows for the investments you want to make, before you sign up!

Question 2 from YouTube: Should I set-up a multiple-member IRA LLC to buy real estate? Is there an advantage over a single-member LLC?

This is more of a legal question, as the IRA doesn’t really care too much if it owns a single or multi-member LLC. The federal tax treatment of the LLC does not matter. Essentially, it will come down to state laws, as to which one you may want to choose. For example, IRA Financial is based in Florida, which doesn’t offer full limited liability protection for a single member LLC. The downside, is that you need to file IRS Form 1065 with a multi-member LLC. There is no additional filing with the IRS for a single member LLC, unless your state requires it.

Most states offer the same protection, no matter the type of LLC you have. Therefore, if you live in a state where it doesn’t matter, it’s usually more cost effective and easier to go the single member route.

Question 3 from YouTube: What’s the difference from letting a custodian do your Self-Directed IRA investment and doing it directly through an LLC ? What benefits does the custodian IRA have?

Essentially, you have two choices when it comes to a Self-Directed IRA – Checkbook Control (with an LLC) or custodian controlled (no LLC). Custodian control means your custodian, such as IRA Financial Trust, will make the investment at your request. Checkbook Control means you have access to your funds, without having to go through the custodian. In addition, the LLC gives your IRA protection.

Generally speaking, if you need greater control of your IRA funds, checkbook control is the way to go. For example, you own a rental property with your IRA, and you need access to the funds for renovations. You can simply write a check whenever you need. However, if you are looking at an investment that’s hands-off, such as a five-year lock in equity, you might not need that control. The custodian will do all the work.

There is not right or wrong answer. It all boils down to each individual’s investment choices and how much control of the IRA funds they need. In fact, IRA Financial adjusted its fee schedule and now charges a flat fee of $300, no matter what type of Self-Directed IRA you opt for.

AdMail – Keep it Coming

We hope you enjoyed the latest episode of AdMail. Mr. Bergman will continue to respond to questions each week so long there is a demand for them! If you have any questions for him, email him at [email protected].

As with his other podcasts, you can check out AdMail on SoundCloud. Be sure to subscribe to know when the next one pops up! Thanks for listening and have a great day, Self-Directed Nation!


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