Full service custodians provide the required reports to the IRS on behalf of your IRA. BUT, do you know what the IRS really needs from an authorized custodian? 1. A custodian must record to the IRS on the entry and exit of funds from the IRA e.g. contributions, transfers & rollovers of retirement funds between custodians, and distributions (taxable or tax free). 2. Annual filing of a form 5498 with the IRS which is a declaration of what is owned in the IRA and its current value as of December 31st. That’s it folks, that’s all there is!
Full service IRA custodians will allow you to order up a prohibited transaction and run it through without a second thought. The only thing protecting you from your actions at that point is that full service custodians are notorious for terrible service and they might just delay things long enough for the “deal” to be missed. Everything else they require, and charge you for, is unnecessary! In other words, all those hoops you’re jumping through are required by the custodian, not the IRS.
As a long time real estate investor, I understand value and know how to do my own due diligence. If a full service custodian isn’t helping me, they’re hurting me by delaying my ability to negotiate and follow through. Forget about tax liens, they require spontaneity that is totally unavailable when someone else has your money and “will let you know” in a week or two.
I have found the only solution that makes sense is a Self-Directed IRA LLC. There is a custodian required, but in this structure the custodian performs only those reporting functions minimally required by the IRS. (see 1st paragraph). One big note on this process: these are your retirement funds versus IRS rules and regulations; do not do this without the assistance of a tax attorney!
IRA Financial Group’s tax attorneys have provided me with an IRS compliant legal structure and have advised me on rules regarding my investments. I make my investment decisions myself and then follow through at my pace. Here’s how they do it:
With IRA Financial Group “checkbook control” self-directed IRA LLC, making an investment is as simple as writing a check. No longer will you have to pay high IRA custodian fees or have to endure long delays and risk losing your deal as a result of having to have every IRA transaction pre-approved by the custodian. IRA Financial Group’s Self-Directed IRA LLC, is an IRS approved structure that allows you to use your retirement funds to make real estate and other investments tax-free and without custodian consent. The Self-Directed IRA involves the establishment of a limited liability company (“LLC”) that is owned by the IRA (care of the IRA custodian) and managed by you or any third-party. As manager of the IRA LLC, you will have control over the IRA assets and be able to make investments directly from your LLC bank account, which can be opened at any local bank. See an investment you want to make – simply write a check or wire the funds straight from your IRA LLC bank account. Don’t waste time and money relying on a custodian to make your IRA investments. The IRS gives you the ability to have more control and authority over your IRA assets – don’t let a custodian control your retirement future – get an IRS approved “checkbook control” self-directed IRA LLC. Work with our in-house tax attorneys to establish your IRS compliant self-directed IRA LLC.
A Self-Directed IRA LLC vs a full service IRA custodian “Checkbook Control” structure offers one the ability to use his or her retirement funds to make almost any type of investment including real estate on their own without requiring the consent of any custodian tax-free!
To learn more about the Self-Directed IRA LLC solution, please contact a tax expert at 800-472-0646