If you are tired of being forced to invest all your hard earned retirement funds in the stock market, then a Self Directed IRA with Checkbook Control may be your answer. With a Self Directed IRA with Checkbook Control or a Checkbook Control IRA, you will be able to better diversify and control your retirement funds by gaining the ability to make traditional investments (i.e. stocks) as well as non-traditional investments (i.e. real estate) tax-free and without custodian consent.
As you are probably aware, the majority of financial institutions do not permit one to invest their retirement funds in non-traditional investments, such as real estate, even though the IRS permits it. The reason for this is purely economical; a bank does not make money when you use your retirement funds to buy real estate.
In order to have the opportunity to buy real estate with your retirement funds, a Self Directed IRA LLC with checkbook control is generally the investment vehicle of choice. With a Self Directed IRA LLC, a limited liability company (“LLC”) is established typically in the state where the investment will be made. The IRA, care of the IRA custodian, will own the LLC and the IRA holder (you) or any third-party can serve as the manager of the LLC. Once the retirement funds have been transferred to a new IRA custodian which allows for real estate investments, the IRA custodian will then transfer the IRA funds directly to the new IRA LLC bank account tax-free. The new IRA LLC bank account can be opened at any local ban o credit union. As manager of the LLC, you will have checkbook control over the IRA funds allowing you to make a real estate investment by simply writing a check directly from your IRA LLC bank account. Once the real estate investment is made, all income and gains would generally flow back to the Self Directed IRA LLC tax-free. Likewise, all investment expenses associated with the IRA real estate investment must be paid using IRA funds.
Using a Self Directed IRA to buy real estate has a number of advantages, including tax-deferral, diversification, and protection against a falling U.S. dollar.