A Self Directed IRA Checkbook structure offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian.
With a Self Directed IRA Checkbook structure, you will be able to invest in almost any type of investment opportunity that you discover, including: real estate, precious metals, tax liens, and much more tax-free! The income and gains from these investments will flow back into your Checkbook IRA LLC tax-free.
It is important to work with tax professionals when establishing an IRS compliant Self Directed IRA Checkbook structure. Because the Self Directed IRA Checkbook structure is based on the Internal Revenue Code as well as Tax Court and IRS opinions, it is crucial to have the structure set-up by tax professionals who have the expertise in the area.
The Self Directed IRA Checkbook structure involves the establishment of a special purpose limited liability company (LLC) that will be owned by one or more IRAs care of a custodian. If more than one IRA will own an interest the LLC, each IRA’s ownership interest will be based on the total amount of IRA funds invested in the LLC. The IRA holder (you) or any third-party can serve as the manager of the LLC. The IRA LLC Operating Agreement will set forth the powers of the manager when it comes to making investments and transacting on behalf of the LLC.
Simultaneously to the formation of the special purpose LLC, the retirement funds (IRA, Roth IRA, SEP, SIMPLE, 401(k), 403(b), 457, etc) will be transferred tax-free from the current IRA custodian to a new FDIC backed/IRS approved Passive Custodian that allows for truly Self Directed IRA investments, such as real estate With a Self Directed IRA Checkbook structure you no longer have to pay excessive custodian fees based on account value and transaction fees. Instead, with a Self-Directed IRA LLC, an FDIC backed IRS approved passive custodian is used.
Once the IRA funds have been transferred to the new IRA Passive Custodian, the IRA Passive Custodian will then transfer the retirement funds tax-free to the special purpose IRA LLC bank account. Once the IRA funds have been transferred tax-free to the new IRA LLC bank account, the manager of the Self Directed iRA LLC, you will have the authority to make investment on behalf of your IRA LLC. The Investment must be made in the name of your Self Directed IRA LLC. All income and gains generated by your IRA LLC will generally flow back to the IRA tax-free!