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“Checkbook Control” Self-Directed Roth IRA LLC

checkbook control Self-Directed Roth IRA

A Self-Directed Roth IRA LLC with “Checkbook Control” is an IRS and tax court approved structure. This allows you to use your Roth IRA funds to make almost any type of investment. Investments include:

  1. Real estate
  2. Tax liens
  3. Precious metals
  4. Foreign currency
  5. So much more

And the best part is, it’s completely tax-free. With a checkbook control Self-Directed Roth IRA LLC, you don’t need the consent of a custodian to make an investment. Additionally, you won’t be subject to excessive custodian account fees.

To establish a checkbook control Self-Directed Roth IRA LLC structure, first establish an LLC. This is also known as a limited liability company. It must be owned by the Roth IRA and managed by the IRA account owner (you).

The IRA owner’s funds are then transferred by the passive custodian to the new Roth IRA LLC bank account. As the manager of the Roth IRA LLC, you will have the authority to make investment decisions. These decisions are on behalf of the Roth IRA with “checkbook control” over your Roth IRA funds.

By having checkbook control over your Roth IRA funds you will gain the following advantages:

Investment Opportunities

A checkbook control Self-Directed Roth IRA LLC will allow you to invest in almost any type of investment opportunity that you discover. This includes:

  1. Real Estate (rentals, foreclosures, raw land, tax liens etc.)
  2. Private businesses
  3. Precious metals
  4. Foreign currency
  5. Stock options
  6. Hard money
  7. Peer to peer lending

Your only limit is your imagination. Of course, you can still make traditional investments, such as stock and mutual fund investments, as with a non-Self-Directed IRA. The income from these Roth IRA investments will flow back into your IRA – tax-free.

Control

Again, with a checkbook control Self-Directed Roth IRA LLC, you no longer need approval by the custodian of your account. Instead, as manager of the Self-Directed Roth IRA LLC, all Roth IRA investment decisions are yours. To make an investment, simply write a check or wire funds straight from your Self-Directed Roth IRA LLC bank account.

Let’s take a look at how a checkbook control Self-Directed Roth IRA can benefit you and your LLC with the following examples.

Example 1

Joe has a Self-Directed Roth IRA LLC set-up by the IRA Financial Group. Joe has established his Self-Directed Roth IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his Roth IRA funds to purchase a home from Steve, an unrelated third-party (non-disqualified person).

Steve is anxious to close the transaction as soon as possible. With a checkbook control Self-Directed Roth IRA LLC, Joe can simply write a check using the funds from his Roth IRA LLC account. Additionally, he can wire the funds directly from the account to Steve. Joe, as manager of the LLC, no longer needs the consent of the IRA custodian before making the real estate purchase.

In contrast, with a regular Self- Directed IRA without checkbook control, Joe may not be able to make the real estate purchase since seeking custodian approval will likely take too much time.

Example 2

Joe has a Self-Directed Roth IRA LLC set-up by the IRA Financial Group. Joe established his Self-Directed Roth IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his Roth IRA funds to invest in tax lien certificates via auction.

Purchasing tax lien certificates requires Joe to make the tax lien payment at the auction. With a checkbook control Self-Directed Roth IRA LLC, Joe can simply bring his LLC checkbook to the auction or secure a certified check from the bank in order to make payments at the auction.

In contrast, with a regular Self-Directed Roth IRA without checkbook control, Joe can’t make tax lien certificate investments. This is because custodian approval is necessary before each tax lien certificate purchase. Furthermore, Joe won’t have enough time to seek custodian consent.

Tax-Free Investing

All income and gains with the Roth IRA investment grow tax-free, therefore will not be subject to withdrawal/distribution taxes. That’s the primary advantage of using a Self-Directed Roth IRA LLC. This is because, unlike traditional IRAs, you are generally not subject to any tax upon taking Roth IRA distributions once you reach the age of 59 1/2.

Lower Custodian Fees

With a checkbook control Self-Directed Roth IRA LLC, you can save a lot of money on IRA custodian fees. In other words, with a “checkbook control” Self-Directed Roth IRA LLC, you use an FDIC (Federal Deposit Insurance Corporation) backed IRS passive custodian. The custodian in the “checkbook control” Self-Directed Roth IRA LLC structure is referred to as a “passive” custodian largely because there is no requirement for the custodian to approve any IRA investment.

The passive custodian simply serves the role of satisfying IRS regulations. By using a Self-Directed Roth IRA LLC with “checkbook control” you can take advantage of all the benefits of self-directing your retirement assets without incurring excessive custodian fees and custodian delays. You are the manager. You have “checkbook control” over your Roth IRA funds.

See how much you can save in custodian fees with a Self-Directed IRA LLC Structure:

Savings with a Self-Directed IRA LLC Structure

Self-Directed IRA Custodian
Checkbook Control
Annual Fees – Assuming $150,000 IRA Value and 2 Transactions per year
Equity Trust
No
Approximately $975 per year – Fees may increase based on increase in value of investment(s)
Pensco Trust
No
Approximately $975 per year – Fees may increase based on increase in value of investment(s)
Entrust

Yes

Approximately $485 per year – Fees may increase based on increase in value of investment(s) or number of transactions
IRA Services

Yes

$200 flat fee for Year 1
$136 flat fee for Year 2+
Sunwest Trust
Yes
$275 flat fee for Year 1
$225 flat fee for Year 2+

 

Below are a number of examples that demonstrate the financial savings one can enjoy using a checkbook control Self-Directed Roth IRA LLC versus a Self-Directed IRA without “checkbook control”.

Example 1

Jim, who resides in Missouri, wants to use his retirement funds to invest in real estate and is debating between using a checkbook control Self-Directed Roth IRA LLC and a Self-Directed IRA without “checkbook control”.

If Jim selects Equity Trust as the custodian, Jim will pay approximately $975 each year for a custodian. Additionally, custodian approval is necessary to purchase or sell a real estate investment. Over a 4-year period, Jim will pay approximately $3900 to Equity Trust for custodian services.

Alternatively, if Jim elects to use the IRA Financial Group’s Self-Directed Roth IRA LLC checkbook control structure, Jim pays approximately $1500 in year 1. However, for every year thereafter Jim is only required to pay approximately $136 per year for maintenance of the “checkbook control” structure. Thus, over a 4 year period, Jim must pay approximately $2,044, a saving of $1856 or a savings of approximately 47.5%.

Example 2

Beth, who resides in Michigan, wants to use her retirement funds to invest in precious metals and is debating between using a checkbook control Self-Directed Roth IRA LLC and a Self-Directed Roth IRA without checkbook control.

If Beth selects Equity Trust as the custodian, Beth will pay approximately $975 each year for a custodian. Also, custodian approval is, again, necessary to purchase or sell precious metals. Over a 6-year period, Beth will pay approximately $5,850 to Equity Trust for custodian services.

Alternatively, if Beth elects to use the IRA Financial Group’s Self-Directed Roth IRA LLC checkbook control structure, Beth pays approximately $1,500 in year 1. However, for every year thereafter she only needs to pay approximately $136 per year. This is for maintenance of the “checkbook control” structure. Thus, over a 6 year period, Beth must pay approximately $2,044, a saving of $3806 or a savings of approximately 65%.

Example 3

Dan, who resides in Kentucky, wants to use his retirement funds to invest in real estate and is debating between using a “checkbook control” Self-Directed Roth IRA LLC with the IRA Financial Group and a Self-Directed Roth IRA without “checkbook control”.

If Dan selects Pensco Trust as the custodian, Dan has to pay approximately $975 each year for a custodian. Furthermore, custodian approval is necessary to purchase or sell a real estate investment. Over a 5-year period, Dan has to pay approximately $4875 to Pensco Trust for custodian services.

Alternatively, if Dan elects to use the IRA Financial Group’s Self-Directed Roth IRA LLC “checkbook control” structure, Dan pays approximately $1500 in year 1. However, for every year thereafter Dan is only required to pay approximately $136 per year for maintenance of the “checkbook control” structure.

Thus, over a 5 year period, Jim pays approximately $2180, a saving of $2695 or a savings of approximately 55%.

Example 4 

Lisa, who resides in Iowa, wants to use her retirement funds to invest in tax liens and is debating between using a checkbook control Self-Directed Roth IRA LLC and a Self-Directed Roth IRA without “checkbook control”.

If Lisa selects Equity Trust as the custodian, Lisa pays approximately $975 each year for a custodian, and she also needs custodian approval to make each tax lien purchase. Over a 7-year period, Lisa will have to pay approximately $6825 to Equity Trust for custodian services.

Alternatively, if Lisa elects to use the IRA Financial Group’s Self-Directed Roth IRA LLC checkbook control structure, Lisa pays approximately $1500 in year 1. However, for every year thereafter, she only has to pay approximately $136 per year for maintenance of the “checkbook control” structure. Thus, over a 7-year period, Lisa must pay approximately $2452, a saving of $4373 or a savings of approximately 64%.

Speed

With a Self-Directed Roth IRA LLC with checkbook control, you, as manager of the Roth IRA LLC, can act quickly on a great investment opportunity. With a Self-Directed Roth IRA LLC, when you find an investment that you want to make with your Roth IRA funds, simply write a check or wire the funds from your Self-Directed Roth IRA LLC bank account.

As you can see, The Self-Directed Roth IRA LLC allows you to eliminate the delays typical of an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.

Diversification

With a Self-Directed Roth IRA LLC, you can invest in almost any type of investment, including real estate. This allows you to diversify and better protect your retirement portfolio.

Access

With a Self-Directed Roth IRA LLC with checkbook control, you, as manager of the Roth IRA LLC, will have direct access to your Roth IRA funds allowing you to make an investment quickly and efficiently. There is no need to obtain approvals from your custodian. And you don’t have to deal with time delays awaiting approval from your custodian or paying any review fees. Instead, making a Roth IRA investment is as simple as writing a check or wiring funds directly from your Roth IRA LLC checking account.

The IRA Financial Group will take care of setting up your entire checkbook control Self-Directed Roth IRA LLC structure. The whole process can be handled by phone, email, fax, or mail and typically takes between 7-21 days to complete. Of course, the timing largely depends on the state of formation and the custodian holding your retirement funds.

Our Roth IRA experts and tax and ERISA professionals are onsite and will reduce the setup time and cost. More importantly, each client of the IRA Financial Group is assigned a retirement tax professional to help establish the checkbook control Self-Directed Roth IRA LLC structure. You will find that our fees are significantly less than other companies that perform the same or similar services.

Let’s get started today and Contact IRA Financial Group.

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