A self-directed IRA LLC will offer you the ability to make traditional (stocks, mutual funds) as well as non-traditional investments (real estate, precious metals, etc.) tax-free and without custodian consent. Tired of seeing all your hard earned retirement assets lose value in the stock market? Upset that the value of your IRA or 401(k) has taken a dive over the last four years? Protect and better diversify your retirement portfolio with a self-directed IRA LLC. Take control of your retirement future and have the opportunity to make the investments you want when you want them.
With IRA Financial Group’s Self-Directed IRA LLC, a special purpose limited liability company (“LLC”) is created which is owned 100% by the IRA and managed by you or any third-person. The advantage of using an LLC to make the investment is that an LLC is treated as a passthrough entity for tax purposes meaning the owner of the LLC would be subject to the tax not the LLC itself. However, as per Internal revenue Code Section 408, IRAs are exempt from tax. As a result, in most cases, all income and gains generated by the IRA LLC would flow back to the IRA tax-free. In addition, the LLC investment vehicle allows the IRA owner to take more control of his or her retirement funds by keeping the IRA funds at a LLC bank account and not with a far away custodian offering “checkbook control” and greater flexibility to make investments quick and without delay.
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 retirement tax professionals to establish your IRS compliant self-directed IRA LLC.
A Self-Directed IRA LLC “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!
Advantages of the “Checkbook Control” Self-Directed IRA LLC
- Invest in what you know and understand tax-free, such as real estate, precious metals, tax liens, hard money loans, private businesses, and much more.
- Take control of your IRA assets and make investments from a local bank account.
- Making an investment is as easy as writing a check or executing a wire transfer.
- Save on custodian fees – no transaction or annual account balance fees.
- Invest with limited liability protection.
- Asset & creditor protection.
What is a Self-Directed IRA?
The self-directed IRA is the vehicle that is best known for allowing investors to use IRA funds to by alternative assets, such as real estate. In the last several years, the number of Self-Directed IRA accounts has grown significantly. According to a variety of respected researchers, including those from the Federal Reserve Board, the IRS, and the National Association of Government Defined Contribution Administrators, even institutional investors expect to have 28 percent of their portfolios allocated to alternative investments by 2013, up 26 percent from 2010. The numbers are even higher today.
There is a variety of ways to self-direct your own retirement fund investments, via a custodian or through a special purpose limited liability company (LLC). A custodian, such as the IRA Financial Trust Company, is your IRA trustee. Basically, that’s the institution that holds your IRA account. By law, every retirement account must be held at a custodian or trustee. A trustee may be a bank, trust company, credit union, or a large brokerage firm that is licensed by the IRS. IRS regulations require that either a qualified trustee or custodian hold the IRA assets on behalf of the IRA owner. A true Self-Directed IRA custodian is known as a passive custodian—and a passive custodian allows the IRA holder to engage in alternative asset investments like real estate. What it generally doesn’t do is offer investment advice. Whereas, traditional financial institutions and banks, such as Charles Schwab or Wells Fargo, will allow you to establish a Self-Directed IRA, but will limit you in what you can buy. The reason behind this comes down to dollars and cents. Simply put, traditional financial institutions do not make money when you purchase investment assets they do not sell, such as real estate. In other words, if you want to buy real estate or make alternative asset investments using an IRA, you need to use a special IRA custodian that allows for alternative asset investments, like the IRA Financial Trust Company, but cannot use a traditional bank, such as Bank of America.
Types of Self-Directed IRAs
The two most popular ways to use retirement funds to make alternative asset investments, such as real estate are the (i) custodian controlled IRA, and (ii) the Self-Directed IRA LLC with “checkbook control.” The main difference between using a custodian controlled Self-Directed IRA and a Self-Directed IRA LLC with checkbook control is that with the checkbook control IRA, a special purpose LLC is established that will ultimately be owned by the IRA and managed by the IRA holder. The courts and the IRS have held that the use of an entity wholly owned by an IRA and managed by the IRA holder does not violate IRS rules and the LLC can make IRS approved investments, such as real estate and cryptocurrencies. With a Self-Directed IRA LLC with “Checkbook Control”, you will have total control over your IRA funds and you will no longer have to get each investment approved by the IRA custodian. Instead, all decisions are truly yours. When you find an investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. A Self-Directed IRA LLC with “Checkbook Control” will allow you to save money on annual IRA custodian fees since you, as the manager of the IRA LLC, will have control over the IRA funds and not the custodian. In addition, the Self-Directed IRA LLC allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself and without high annual custodian fees. For most alternative asset investments, but especially for real estate and cryptocurrencies, the Self-Directed IRA LLC with “Checkbook Control” is the popular choice.
Why Use a Self-Directed IRA to Make Alternative Asset Investments?
The Internal Revenue Code does not describe what a Self-Directed IRA can invest in, only what it cannotinvest in. Internal Revenue Code Sections 408 & 4975 prohibits Disqualified Persons from engaging in certain type of transactions. In general, so long as the Self-Directed IRA does not purchase life insurance, collectibles, or engage in a prohibited transaction outlined in IRC 4975, then the investment can be made. The advantage of using a Self-Directed IRA to make alternative asset investments, such as real estate, notes, private businesses, hedge funds, precious metals, and cryptocurrencies, is that it is perceived to provide a great way to diversify your retirement portfolio, get some protection from inflation, as well as have the ability to invest in what you know, understand, and love, such as real estate or cryptocurrencies.
How to use a Self-Directed IRA LLC to Make Investments?
1. Establish self-directed IRA LLC with IRA Financial Trust.
2. Your IRA assets/cash can be rolled over to IRA Financial Trust tax-free.
3. A special purpose LLC will be established that will be wholly owned by the IRA. The IRA assets/cash will then be transferred to the LLC tax-free in exchange for 100% interest in the LLC.
4. You, as manager of the LLC, will open a bank account for the LLC at any local bank. IRA Financial will draft LLC Operating Agreement identifying you as manager of the LLC and the IRA as the sole member.
5. You, as manager of the LLC, will then have checkbook control over all the assets/funds in the IRA LLC to make the alternative asset investment.
6. Since the LLC will be owned by one IRA, the LLC will be treated as a disregarded entity for federal income tax purposes and no federal income tax return will be required to be filed. All income and gain from the real estate investments will flow back to the IRA without tax.
Take Control of Your Retirement Funds Tax-Free!
The Self-Directed IRA structure has become a popular choice for gaining total investment control (“Checkbook Control”) over your IRA funds and making investments tax-free.
IRA Financial Group’s Self-Directed IRA LLC with “checkbook control” solution is tax court and IRS approved. A special purpose limited liability company (“LLC”) is established that is owned by the IRA account and managed by the IRA account holder – which is YOU. The IRA Custodian then transfers the IRA Holder’s retirement funds to the new IRA LLC’s bank account, which can be opened at any local bank providing the IRA holder with “checkbook control” over his or her IRA funds. When you find an investment that you want to make with your IRA funds, as manager of the LLC, you will simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. All investment income and gains would flow back to your Self-Directed IRA Tax-Free! The Self Directed IRA LLC with “checkbook control” allows you to eliminate the delays and costs associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.
A World of Investment Opportunities
Tired of being forced to invest in stocks or mutual funds? Have an investment opportunity, such as real estate or a business investment that you would love to make with your IRA funds? Then the Self-Directed IRA LLC is your solution.
With a Self-Directed IRA LLC, you will be able to invest in almost any type of investment opportunity that you discover, including: domestic or foreign real estate (rentals, foreclosures, raw land, tax liens etc.), private businesses, precious metals (i.e. gold or silver), hard money & peer to peer lending as well as stock and mutual funds; your only limit is your imagination. The income and gains from these investments will flow back into your IRA tax-free.
Purchasing Real Estate Tax Free with a Self Directed IRA Real Estate LLC
The IRS has always permitted an IRA to purchase or hold domestic or foreign real estate or raw land. Making a real estate investment is as simple as writing a check with a Self Directed IRA – also known as a Self Directed IRA Real Estate LLC. The Self Directed IRA Real Estate LLC structure, which works the same way as the Self Directed IRA LLC structure, is used for tax-free investing IRA funds in real estate.
Since you are the manager of your Self-Directed IRA Real Estate LLC, you have the authority to make investment decisions on behalf of your IRA. One major advantage of purchasing real estate with a Self-Directed IRA is that all gains are tax-deferred until a distribution is taken (Traditional IRA distributions are not required until the IRA owner turns 70 1/2). In the case of a Self-Directed Roth IRA LLC, all gains are tax-free.
With a Self-Directed IRA structure, you will have the power to act quickly on a potential investment opportunity. When you find an investment that you want to make with your IRA funds, as manager of the LLC, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA allows you to eliminate the delays associated with an IRA custodian, enabling you to act quickly when the right investment opportunity presents itself.
Save on Custodian Fees
A Self-Directed IRA LLC structure will help you save a significant amount of money on custodian fees. With a Self-Directed IRA LLC you no longer have to pay excessive custodian fees based on account value and transaction fees. Instead, your IRA funds will be transferred tax-free via a passive custodian to a new LLC bank account where you as manager of the LLC can make investments, such as real estate tax-free and without custodian consent. The IRA custodian is not involved in any way with the IRA investment. In fact, the IRA custodian is not even aware of the type of investments that are being made since you, as manager of the LLC, are in total control of your IRA funds.
Shelter Income Tax-Free with a Self-Directed Roth IRA LLC
The Self-Directed Roth IRA LLC structure, which works the same way as the Self-Directed IRA LLC structure, is used for investing Roth IRA funds in real estate and other investments tax-free! Using a Self-Directed Roth IRA LLC to make investments will allow all the income and gains associated with the Roth IRA investment to grow tax-free and not be subject to tax upon withdrawal or distribution. The Self-Directed Roth IRA LLC presents a number of exciting tax planning opportunities.
The primary advantage of using a Self-Directed Roth IRA LLC to make investments is that all income and gains associated with the Roth IRA investment grow tax-free and will not be subject to tax upon withdrawal or distribution.
Asset & Creditor Protection
By using a Self-Directed IRA LLC with “Checkbook Control”, the IRA holder’s IRA will be protected for up to $1 million in the case of personal bankruptcy. In addition, most states will shield a Self-Directed IRA from creditors’ attack against the IRA holder outside of bankruptcy. Therefore, by using a Self-Directed IRA LLC, the IRA will be generally protected against creditor attack against the IRA holder.
Limited Liability Protection
By using a Self-Directed IRA LLC, your IRA will benefit from the limited liability protection afforded by using an LLC. By using an LLC, all your IRA assets held outside the LLC will be shielded from attack.
Don’t trust an investment advisor or real estate professional to establish your IRS compliant self-directed IRA structure!
Work directly with our in-house retirement tax professionals to setup an IRS compliant Self-Directed IRA LLC with “checkbook control”. IRA Financial Group was founded by retirement tax professionals that worked at some of the largest law firms in the United States, including White & Case LLP and Dewey & LeBoeuf LLP. Each client has direct access to our in-house retirement tax professionals to ensure that the Self-Directed IRA LLC structure is customized to satisfy the client’s retirement and investment objectives.
- Why Choose a Solo 401(k) Plan Vs. a Self-Directed IRA LLC?
- What is a Checkbook Control IRA?
- What is a Real Estate IRA?
- How long does it typically take to set-up the Self Directed IRA LLC structure?
- What are the penalties if I engage in a “prohibited transaction” or a “disqualified transaction”?
- What are the filing requirements for UBTI?
- What is the UBTI tax rate?
- What are some of the factors the IRS or the Courts may consider when determining whether a real estate transaction may be subject to UBTI?
- Using a Self Directed IRA LLC, what type of transactions may trigger the UBTI tax?
- How is UDFI calculated on the sale of a debt-financed asset?
- How is the UBTI tax on UDFI calculated?
- What is UDFI?
- What is Unrelated Business Taxable Income (UBTI)?
- Can I invest in Gold with my Self Directed IRA LLC?
- Can my spouse and I use one Self Directed IRA LLC entity to make IRA investments?