We love self-directed IRAs and being able to invest in the to the full potential of an IRA or 401k. That is one reason we love a checkbook IRA or a self-directed IRA with checkbook control.
Forming a limited liability company (LLC) with your self-directed IRA is a great way to use your self-directed IRA. This is just another bit of evidence to show that self-directed IRAs give you more control over your retirement account and investing.This type of account is commonly referred to as a checkbook IRA or IRA LLC.
What are the basic steps to how a checkbook IRA works?
- Your IRA forms an LLC
- The IRA owner becomes acting manager of the LLC
- The LLC opens a bank account in its name and funds are deposited into the account from the IRA.
- You are able to write checks out of the account to acquire investments as the LLC manager
So what are some of the benefits to having a self-directed IRA with checkbook control?
While there are multiple benefits to having checkbook control with your IRA let's go over some of the top benefits.
The main benefit to a checkbook IRA is that you are are able to write check directly from the LLC account to acquire investments. There is no waiting for the custodian to approve and then direct payment for you. You save time and back and forth with the custodian. This is really the only way to go about investing with your self-directed IRA without having to always go through the custodian.
Another benefit that might be important to you is an LLC has some more personal protection when you are investing in multiple properties with multiple LLCs. If you want to know about these possible protections, contact us.
No matter what your reasoning is for being interested in a checkbook IRA you will want to make sure you are properly educated. A checkbook IRA gives you a lot more flexibility and control and with that control you'll want to make sure you are doing things correctly. Checkbook control offers you the ability to invest without having to go directly through your custodian. Because of this you must make sure that the investments that you invest with follow the rules of IRA investing. There are also rules/taxes for LLCs that may be applicable depending on the state you are in.
As long as you do sufficient due diligence before you invest in anything and follow the rules to IRA investing then you shouldn't have to worry. One of the biggest rules to be aware of for investing with any self-directed IRA is not dealing with disqualified persons. There are also other prohibited transactions to be aware of. If you want more info on other prohibited transactions please contact us.
We want to make investing with a checkbook IRA to be the best experience that you can have. We are here to help inform you and answer any questions to your checkbook IRA investing. Contact us now for help setting up your checkbook IRA or answering any questions you may have with your account.
Author: Nick Barker