Self-Directed IRA LLC
Unlike a conventional Self-Directed IRA which requires custodian consent and requires high custodian fees, a Self-Directed IRA LLC with Checkbook Control will allow you to buy real estate or make other investments by simply writing a check. With a Self-Directed IRA LLC, a special purpose limited liability company (“LLC”) is established 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, the IRA holder (you) will have total control over the IRA assets to make the investments you want and understand. With a Self-Directed IRA LLC you will never have to seek the consent of a custodian to make an investment or be subject to excessive custodian account fees based on account value and per transaction.
Tax Court & IRS Approved
The legality of the checkbook IRA structure is unquestioned as it has been recognized by the U.S. Tax Court in Swanson v. Commissioner and later confirmed by the IRS in Field Service Advice Memorandum
200128011 and most recently in T.C. Memo 2013-245.
How Does it Work?
1. Set up a Self-Directed IRA LLC
The Bergman Law Group can help you establish your IRS compliant self-directed IRA LLC solution. We will assist you in establishing the IRS approves special purpose LLC, acquire the new LLC’s Tax ID# (EIN), as well as prepare the special purpose LLC Operating Agreement, which is required by all IRA passive custodians. In addition, we will prepare all other necessary corporate documents to assist with the establishment of the self-directed IRA LLC and subsequent funding of the LLC.
2. Transfer of Retirement Funds Tax-Free.
The Bergman Law Group will assist you in establishing a new self-directed IRA account at an FDIC insured and IRS approved IRA administrator/custodian.
The IRS approved IRA administrator and FDIC backed custodian in the “checkbook control” Self-Directed IRA LLC structure is referred to as a “passive” largely because the institution is not required to approve any IRA related investment and simply serves the passive role of satisfying IRS regulations. The IRA administrator and passive custodian business model is built around the establishment and maintenance of IRAs, whereas, a traditional IRA custodian generates income through the marketing and sale of investment products.
All the IRA administrators and passive custodians we work with are FDIC backed and IRS approved. Once your current retirement account custodian has transferred your retirement funds to the new passive custodian, the new passive custodian will immediately transfer your funds to your new IRA LLC where you as manager of the LLC will have “Checkbook Control” over the funds.
What types of retirement funds may be transferred to a self-directed IRA LLC without tax or penalty?
- Traditional IRA
- Roth IRA
- Plans for Self-Employed (Keoghs)
- Money Purchase Pensions Plans
The Bergman Law Group will assist you in completing all the necessary custodian documents so your retirement funds are transferred to the new passive custodian quickly and without any tax.
3. Open IRA LLC Bank Account.
The Bergman Law Group will work with you to help open a local bank account for the LLC at any bank of your choice. You can open a bank account for your Self-Directed IRA LLC at any bank or credit union.
4. Tax-Free Transfer of Funds to LLC Bank Account.
The Bergman Law Group will work with you to direct the passive custodian to transfer the IRA funds to your new Self-Directed IRA LLC bank account. The IRA LLC checking account can be opened at any bank or credit union.
5. Make an Investment
As the Manager of the Self-Directed IRA LLC, you will have the freedom to make all investment decisions for your Self-Directed IRA LLC. In other words, you will have “checkbook control” over your IRA funds allowing you to make an IRA investment by simply writing a check or wiring funds directly from the self-directed IRA LLC bank account. Whether it’s stock, real estate, tax liens, precious metals, hard money loans, or private business investments, the self-directed IRA LLC will offer you the ability to better diversify your retirement portfolio as well as allow to take greater control over your retirement future by making investments you know and understand.
6. Tax-Free Investing.
The Bergman Law Group will work directly with you to maximize the tax-free benefits available when using retirement funds to make IRS approved investments. One of the most attractive features of the self-directed IRA LLC solution is the ability to generate tax-deferred income and gains on your IRA investments (in the case of a Roth IRA the income and gains would be tax-free).
Since your IRA will become the owner(s) (member(s)) of the newly formed IRA LLC, all income and gains generated by an IRA LLC investment will generally flow back to your IRA without tax. Because an LLC is treated as a pass-through entity for federal income tax purposes, all income and gains are taxed at the owner level not at the entity level. However, since an IRA is a tax-exempt party pursuant to Internal Revenue Code Section 408 (408A in the case of a Roth IRA) and, thus, does not pay federal income tax, all investment income and gains will generally flow through to the IRA tax-free!
Self-Directed IRA LLC Structure
To view a diagram of the Self-Directed IRA LLC structure, please select the image below.
To learn more about the advantages of using a self-directed IRA LLC to make investments, please contact us at 800-472-0467.
Did you know? You can buy 99.99% pure precious metals with your Self-Directed IRA.