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Self-Directed IRA LLC

More flexible. More opportunities. More secure. More lucrative. More control. Fewer fees. Checkbook investment speed. If any of that sounds attractive, read on...

Self directed IRA LLCs

The people who will benefit from the features of self directed IRA LLCs are those who truly want to have control of their Investment portfolio, investors who want to substantially reduce fees and those who want to make fast investment decisions.

This is nothing new. Investors have had the ability to self-direct their investment funds into their choice of arenas and reap tax-free profits since 1974. In the last 10 years or so, the self-directed investing tool received the ultimate in flexibility, that of owning and managing a Limited Liability Company.

Here's what you do:

  • Open a new self directed IRA and have your IRA Limited Liability Company professionally organized
  • Roll all existing funds into your new retirement account
  • Form a new LLC that is owned by the new IRA (that has a specially drafted compliant operating agreement)
  • Move all IRA funds into your LLC's bank account via IRA custodian
  • Issue LLC membership interest certificate to your IRA

With the above format you are free to invest your retirement funds. It is as easy as signing a check. This opens many doors to investment opportunities, such as real estate, gold, and privately held companies. All that is required is your LLC conform to all IRS/DOL requirements and you make approved investments. For example, you can't legally buy a vacation home through your IRA LLC and vacation in it. There is no self-dealing. For example, you can't legally buy a home or other asset from yourself that you already own. Although there are exceptions, these rules are for legitimate investments. See IRS guidelines.

What can you do with an IRA LLC?

  • Make quick investment decisions: Buying foreclosed real estate properties is a classic example of checkbook speed investing. You can take financial action without a custodian nixing the process or charging exorbitant fees.
  • Really, legitimately diversify your investments: You can implement your retirement funds for a multitude of tax-free profit opportunities. For example, your LLC can make short-term or long-term loans on real estate, automobiles or businesses, and charge higher rates than traditional lending institutions.
  • Save money and have closer control: You can buy rental property, then screen your own tenants and manage it yourself, avoiding property management costs.

You are free to write a check from your LLC bank account into the investment of your choice without custodian approval, review fees or transaction charges resulting in the most flexible retirement investing tool with more opportunity, control, security, and quite frequently - greater growth potential.

The mechanics of this are actually quite simple. You self direct your current IRA into investing in a privately held LLC. Your IRA owns one hundred percent interest of a company that you manage that invests your retirement funds. There are few limitations and almost all prohibited transactions involve commingling funds with a related party; a related party being you and your immediate family. See the IRS rules for exact definitions, http://www.irs.gov/pub/irs-drop/rr-06-38.pdf. Nearly all arms length investments will be legitimate and there are number of legal exceptions that can be made. Speak to a licensed tax or investment advisor about your situation for more detail. In addition, your self-directed IRA custodian can help guide you.

Self-Directed IRA LLC
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