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The Self-Directed IRA LLC – Checkbook Control

Self-Directed IRA LLC with Checkbook Control

Self-Directed IRA LLC with Checkbook Control

Self-Directed IRA LLC with Checkbook Control, also referred to as Checkbook Control IRA, is an IRS and tax court approved structure. It allows you to use your IRA funds for practically any type of investment. This includes:

  1. real estate
  2. tax liens
  3. precious metals
  4. foreign currency
  5. much more

The best part is, it’s completely tax free!

Self-Directed IRA with Checkbook Control

Before we get into the Self-Directed IRA fees, let’s examine what a Self-Directed IRA with checkbook control can do for you.

The Self-Directed IRA with Checkbook Control comes with many advantages for the independent IRA investor.

  1. You never have to seek the consent of a custodian to make IRA investments.
  2. You will no longer receive excessive custodian account fees
  3. No longer endure custodian delays on an investment opportunity

Lower Custodian Fees

A Self-Directed IRA LLC with “checkbook control” prevents you from paying excessive custodian fees based on account value and transaction fees. Instead, with a “checkbook control” Self-Directed IRA LLC, you will use an FDIC backed IRS passive custodian.

The custodian in the “checkbook control” Self-Directed IRA LLC structure is referred to as a “passive” custodian largely because the custodian has no requirement to approve any IRA related investment and simply serves the role of satisfying IRS regulations.

So by using a Self-Directed 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. Because as manager of the IRA LLC, you now have “checkbook control” over your IRA funds.

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

Custodian Fee Savings

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+

Self-Directed IRA Fees

The Self-Directed IRA fees depend on what type of SDIRA account you wish to open. Although we have only talked about Self-Directed IRA with checkbook control, you also have the option of establishing a Custodian-Controlled IRA. The Self-Directed IRA fees for both are different.

Self-Directed IRA Custodian Control (Full Service)

The SDIRA fees if you choose custodian control (also known as “full service”) includes an annual custodian fee. At IRA Financial Group, we offer some of the lowest fees in the industry.

Our Self-Directed IRA fee for custodian control is $360 annually, with quarterly installements of $90.

Because the custodian is doing the work for you, the annual fee is greater than the Self-Directed IRA LLC with checkbook control.

At IRA Financial, we have significantly minimized the amount of transaction fees you must pay.

A custodian control SDIRA is best for IRA investors who are not making multiple IRA investments.

Self-Directed IRA Checkbook Control (SDIRA LLC)

Whereas with a Self-Directed IRA with checkbook (also known as Self-Directed IRA LLC), the annual Self-Directed IRA fee is much lower because you no longer have to pay a custodian to do the work for you. You’re doing it yourself.

At IRA Financial, our Self-Directed IRA fee with checkbook control is $180 annually with quarterly installments of $45.

How to Establish a Self-Directed IRA with Checkbook Control

To establish the Self-Directed IRA LLC with Checkbook Control, the IRA establishes and owns a limited liability company (“LLC”).  The IRA account owner (you) will manage the LLC. The passive custodian then transfers the The IRA owner’s funds to the new IRA LLC bank account.

As manager of the IRA LLC, the owner has authority to make investment decisions on behalf of the IRA. However, this is if the IRA owner has “checkbook control” over his or her IRA funds.

Again, with Checkbook Control IRA don’t need custodian consent to make an investment. You also won’t be subject to excessive custodian account fees.

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

1. Investment Opportunities

A Self-Directed IRA LLC with Checkbook Control will allow you to invest in almost any type of opportunity that you discover, including:

  • Real Estate (rentals, foreclosures, raw land, tax liens etc.)
  • Private businesses
  • Precious metals
  • Foreign currency
  • Stock options
  • Hard money & peer to peer lending

Truly, your only limit is your imagination. You can still make traditional investments, such as stock and mutual fund investments as with a regular IRA. The income from these IRA investments will flow back into your IRA tax-free.

2. Control

With a Self-Directed IRA LLC, you no longer need custodian approval for every investment of your account. Instead, as manager of the Self-Directed IRA LLC, all IRA investment decisions are truly yours.

If you want to make an investment, simply write a check or wire funds straight from your Self-Directed IRA LLC bank account.

Joe’s Self-Directed IRA LLC 

Joe has a Self-Directed IRA LLC set-up by the IRA Financial Group. Joe establishes his Self-Directed IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC. Joe wishes to use his 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 IRA, Joe can simply write a check using the funds from his IRA LLC account. Or, he can wire the funds directly from the account to Steve.

Joe, as manager of the LLC, no longer deals with IRA custodians. Not only does this do away with certain fees, he no longer needs custodian consent 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. Because seeking custodian approval will likely take too much time.

Joe Invests in Tax Liens 

Let’s take a look at an example of an IRA holder who chooses a Self-Directed IRA LLC to invest in alternative assets.

Joe has a Self Directed IRA LLC set-up by the IRA Financial Group. Joe establishes his Self-Directed IRA LLC bank account with Bank of America. The name of Joe’s LLC is Joe Smith IRA LLC.

Joe wishes to use his 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 IRA, 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.

Compare to a regular Self-Directed IRA without “checkbook control.” Joe would not be able to make tax lien certificate investments because he would need IRA custodian approval before each tax lien certificate purchase. As a result, he wouldn’t have sufficient time to seek the consent of the custodian.

Jim from Missouri

Let’s see how much Jim saves if he chooses a Self-Directed IRA LLC vs a Custodian controlled Self-Directed IRA.

Jim resides in Missouri. He wants to use his retirement funds to invest in real estate. He is debating between using a Checkbook Control IRA 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 with the requirement of custodian approval to purchase or sell a real estate investment.

Over a 4-year period, Jim will have to pay approximately $3,900 to Equity Trust for custodian services.

Alternatively, if Jim elects to use the IRA Financial Group’s Self-Directed IRA LLC with checkbook control structure, Jim must pay approximately $1,500 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 is required to pay approximately $2,044, a saving of $1,856 or a savings of approximately 47.5%.

3. Speed

With a Self-Directed IRA LLC with Checkbook Control, you, as manager of the IRA LLC, can act quickly on a great investment opportunity. You can act on a worthwhile investment by simply writing a check. Or you can wire the funds from your Self-Directed IRA LLC bank account to make the investment.

4. Diversification

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

5. Access

With a Self-Directed IRA LLC with checkbook control, you, as manager of the IRA LLC, will have direct access to your IRA funds which allows you to make an investment quickly and efficiently.

At IRA Financial Group we will take care of  your entire Self-Directed IRA LLC Checkbook Control structure. Our team will make the entire process simple. We can handle it by phone, email, fax, or mail. This will take approximately 7-21 days to complete.

Note that timing largely depends on the state the business resides in and the custodian holding your retirement funds.

We have a qualified team of IRA experts, tax and ERISA professionals on-site and ready to reduce your setup time and cost. More importantly, each client of the IRA Financial Group is given a retirement tax professional to help with the establishment of the Self-Directed IRA LLC “Checkbook Control” structure.

Our fee is often less than companies that perform the same or similar services. Contact us today when you’re ready to get started.

Get in Touch

If you still have questions about the Self-Directed IRA fees or checkbook control, contact IRA Financial Group directly at 800-472-0646. Or fill out the form to speak with an on-site IRA specialist today.

Did you know?

With a “Checkbook Control” Self-Directed IRA LLC, you make your own investment decisions and do not need to get anyone’s consent.

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