Checkbook Control is a powerful tool that allows you, the IRA holder, to complete all investment activities through a physical checkbook tied to your IRA.
The IRA owns the Limited Liability Company (LLC), and the tax advantages pass through to the LLC. The LLC is just a tool within the IRA. It is still taxed and treated as an IRA and keeps the tax-deferred or tax-free benefits.
Since the IRA owner acts as the LLC manager, you can essentially self-direct all investment activities yourself without custodial interference. Your LLC holds monies in a bank checking account, and transactions are withdrawn or deposited into that account.
Operating an IRA LLC with Accuplan assisting you will forever change the way you invest.
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Advantages to an IRA LLC
The unique structure of an IRA LLC gives total control over to the account owner. The manager of the LLC, or the trustee, has complete signing authority over the account and does not have to wait for approval from the provider. Checkbook control expedites purchasing assets and decision-making abilities for the account manager.
The IRA LLC is the owner of the assets within the account. You are 100% the owner of the LLC, and therefore the LLC is the owner of the assets within your account. Accuplan does not hold the assets within your IRA LLC.
Managing the LLC is as easy as the management of a regular bank account. In fact, it is a bank account. The manager of the LLC will act as the signee, and these duties will include approving essential functions, like signing contracts, paying expenses, and receiving funds associated with the IRA.
Steering clear of conducting a prohibited transaction is vital; accidentally doing business with a disqualified person may result in the IRS dissolving the offending account, along with fees and penalties.
A prohibited transaction can range from the asset that the LLC is invested in, like a collectible item, or that business was conducted between the LLC and a prohibited person.
IRA LLCs and Tax Benefits
Your self-directed IRA essentially owns and invests through the LLC. Since your self-directed IRA is a tax-deferred or tax-free entity, there are no additional taxable events when your IRA is used to invest through the LLC. Like with a self-directed IRA, as retirement funds flow through the LLC, they must also flow back into the LLC. Any income made through investments must be deposited back into the LLC’s account, not directly to the account owner.
There can be some special taxable events depending on the type of income received by the LLC. One of these taxable events is Unrelated Business Income Tax or UBIT.
Note that the IRA owns the LLC. Your IRA might have to file an additional tax return if that income is taxable. Learn more about UBIT here.
Working with Accuplan
An IRA LLC Set-up by Experts
Filing of Tax ID with the IRS
Competitive Setup Fees
Filing of State Articles
Establishing an IRA LLC with Accuplan
Accuplan’s expert IRA LLC team has an average setup and processing time of 1-2 weeks, depending on the state in which the LLC was created. We are a full-service self-directed IRA provider, authorized and regulated by the Internal Revenue Service in all 50 states for all IRA LLC establishments.
Our IRA LLC establishment process:
- Free consultation on the specifics of your accounts’ needs and goals, transaction fees, and what role Accuplan will play
- Assisting with the setup and funding of your new self-directed IRA account (if applicable
- Writing an LLC operating agreement and filing necessary paperwork in the specific state where the LLC resides, as well as all federal filings, prepared by our legal team
- Professional assistance with establishing a particular bank or brokerage account that’s tied to your LLC
Accuplan Benefits Services can set up the Checkbook IRA LLC to be incorporated in the state where investments are made (i.e., real estate property). The IRA owner does not have to pay additional taxes or filing costs if the state differs from where the IRA owner resides.
Self-Directed IRA LLC FAQs
A self-directed IRA LLC is a tool that self-directed investors utilize to quickly and conveniently purchase an asset or easily pay expenses and upkeep for real estate or other investments. It’s a physical checkbook tied to the IRA, and the IRA holder has signing authority to make and complete purchases without custodial interference.
All IRS rules about a self-directed IRA also apply to an LLC. Prohibited assets include collectibles, life insurance, and S corps.
Yes. In 1996, the Tax Court case Swanson v. Commissioner was affirmed and further confirmed by the IRS in Field Service Advisory in 2001. An IRA LLC is legal and an essential tool for self-directed investors.
Some responsibilities of the LLC manager are filing annual reports, filing tax returns for the entity, or reporting fees. Filing 1099’s or other IRS reports might also be necessary.
Ready to start investing and open an LLC with your self-directed IRA?
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