Curious about an IRA LLC, but a little confused on what they are, and how they benefit investors? We have a couple of answers to your questions.
What is an LLC?
Basically, an IRA LLC is a way for you to take back more control over your retirement investing. It’s a special Limited Liability Company that is either fully or partially owned by your IRA and is held with an IRA custodian. One of the reasons why a client would create an IRA LLC would be to directly control their IRA funds through the establishment of an LLC. This is most beneficial if you are purchasing real estate through the LLC because all rent checks and expenses can go through the LLC rather than through the IRA custodian. That alone is probably one of the biggest reasons people who have a self-directed IRA choose to get it with an IRA LLC.
Whenever your real estate property has expenses that need to be paid you can use your checking account associated with the LLC to pay any expenses. Rather than doing it the normal way, through the custodian. Having to contact your custodian to tell them to pay a certain bill or expense can be annoying and time-consuming. An IRA LLC allows for faster payment and receiving of payments and incomes.
Investing with ease
The reason it’s easier to invest with an LLC is that you now have Checkbook Control. It’s a physical checkbook with funds from your IRA, so now, any fees, repairs, bills, any money associated with your investment is paid through your IRA, from your checkbook. It used to be that you had to go through your custodian, wait a few days, submit more paperwork, and just wait some more. But When you have checkbook control, you’re in control of your IRA account.
With an IRA LLC you will have more control but with that extra control, it means that you will have to be aware of more issues to make sure that you do not do anything that will cause you to accidentally void your IRA.