Last Updated on February 9, 2021
What is a Checkbook IRA?
A Checkbook IRA is essentially a self-directed IRA (individual retirement account) with checkbook control. This is also referred to as a Checkbook IRA LLC, or Self-Directed IRA LLC. They allow you to use your funds to invest in almost any investment, without custodian consent.
On the other hand, you have the option to establish a self-directed IRA with custodian consent. With this type of structure, you still have the ability to make any IRS approved investment. For example, you can invest in traditional funds, like stocks, bonds, mutual funds and ETFs. You can also make non-traditional investments, like real estate, tax liens and cryptocurrencies.
However, with custodian control, you do not have complete signing authority over your retirement account and IRA assets/funds. As a result, you will need custodian consent prior to making any investment. This lends itself to long custodial delays, as well as high custodial fees/transaction fees.
If you don’t plan on investing in alternative assets that involve a high frequency of transactions, then custodian consent may be the best retirement option for you.
Checkbook IRA Benefits
A checkbook IRA is the true definition of self-directed IRA. You gain checkbook control, which comes with many advantages to you, the IRA holder. The major benefits of checkbook control are:
- Complete Control of Your IRA – With the Checkbook IRA, you benefit by investing in assets you understand. Don’t understand Wall Street? Don’t invest in Wall Street. With complete control of your IRA, you can invest in real estate, tax liens, precious metals and many other popular investment assets. Additionally, you no longer need to wait for a custodian’s approval.
- Easy & Immediate Investments – When you see an investment you want, simply write a check or wire the funds from your self-directed IRA LLC bank account. Your self-directed IRA LLC is seen as a business entity, therefore it can establish its own bank account, which gives you the ability to directly access the funds you need. Within minutes, the investment is yours.
- More Affordable – Because you’re the manager of the IRA LLC, you don’t need to pay a custodial fee for each IRA investment, or the transaction fees applies whenever you make a transaction through a custodian. So this last benefit of the Checkbook IRA is that you simply make a one-time establishment fee.
Is the Checkbook IRA Right for You?
Now that you know the checkbook IRA benefits, you may still be wondering whether to establish a self-directed IRA with custodian control or a self-directed IRA with checkbook control.
First, it’s important to know what type of investments you wish to make. If the investment requires a high frequency of transactions, like house flipping or rentals, or you simply need immediate access to funds, then the Self-Directed IRA with checkbook control is right for you. You wouldn’t want to pay custodian fees for high frequency transactions, as this can become costly. Also, if you need immediate access to funds, expect delays with the custodian control structure. Whereas, you can simply access funds from your LLC to make investments on the spot.
Get in Touch
If you still have questions regarding Checkbook IRA benefits, or if you would like to know more about checkbook control and custodian control, contact IRA financial directly at 800-472-0646. Or fill out the form to speak with an on-site IRA specialist who can answer all of your questions in a timely manner.