Learn more | Self-Directed IRA
How it Works
The Self-Directed IRA LLC "Checkbook Control Solution"
The Self-Directed IRA LLC with "checkbook control" is a tax court and IRS approved retirement plan. With the Self-Directed LLC, you must establish a Limited Liability Company (LLC). The IRA will own the LLC and the IRA holder manages it. This setup gives the IRA holder "checkbook control" over his or her retirement funds. Now, you can make any IRA investment as easily as writing a check.
With your Self-Directed IRA LLC, no custodian consent is necessary. As a result, there are no delays when making an IRA investment. You, as manager of the LLC, determines which investments you want to make. The Self-Directed IRA LLC structure provides maximum flexibility and is ideal for IRA holders who plan to make multiple investments.
Begin making non-traditional investments, such as:
How to Set Up a Self-Directed IRA LLC
In three simple steps, here is how to set-up a Self-Directed IRA LLC with Checkbook Control.
1. Transfer Retirement Funds Tax-Free
First, your retirement funds from your current custodian must transfer to an IRS approved FDIC backed passive custodian. You can make transfers from any retirement account, including:
You can transfer or rollover funds to the passive custodian tax-free.
2. Investment of IRA Funds into New LLC
You, the IRA owner, will direct the passive custodian to invest IRA funds into the new Limited Liability Company (LLC). Because the LLC is treated as a flow-through entity for federal income taxes, generally all income or gains of the LLC will flow to the IRA tax-free.
3. The Power of Checkbook Control
Because you're the manager of the LLC, you have the authority to direct the LLC to make investments in real estate, precious metals, tax liens and any other alternative asset class. You can also make traditional investments at your choosing. Again, all income and gains of the LLC flow back into the IRA tax-free.
Self-Directed IRA Custodian – “Passive Custodian”
A passive custodian is an IRS Approved FDIC backed custodian who allows for non-traditional types of investments, like real estate. The passive custodian earns fees by establishing and maintaining IRA accounts, not selling investment products. Whereas, more traditional custodians, such as Charles Schwab, make money by selling traditional investment products.
The passive custodian provides no advice or recommendations regarding the investments you choose to make with your self-directed IRA LLC. The passive custodian simple executes investment decisions by the IRA owner and performs custodial/administrative duties to maintain the tax-deferred status of the IRA (individual retirement account).
In a nutshell, the passive custodian establishes and maintains retirement accounts. They are in attendance to satisfy IRS regulations.
Self-Directed IRA LLC’s are extremely tax-efficient. The main advantage to using a self-directed IRA is that the income and gains from your investment is not subject to tax. Therefore, you don’t pay tax on your investments until you reach retirement age. Again, if you choose a Self-Directed Roth IRA, you pay no taxes when you take a distribution.
We wrote the book on Self-Directed IRAs
The second installment in a four-part series, The Checkbook IRA: Why You Want it, Why You Need it, explores important topics regarding the self-directed IRA and why it has become the leading retirement structure to purchase real estate using IRA funds.
Following the success of Adam Bergman’s previous self-directed IRA book comes Self-Directed IRA in a Nutshell, a straightforward explanation on what IRA investors need to know about self-directed IRA retirement structure.