Texas Self-Directed IRA Checkbook Control

The Texas Self-Directed IRA LLC is a powerful and flexible retirement platform that allows for full diversification of investments and puts the IRA account holder in full control of all investment activities.
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Texas Self-Directed IRA Checkbook Control

TEXAS SELF-DIRECTED IRA

When an LLC is 100% owned by an IRA or combination of IRAs, it is commonly referred to as a Self-Directed IRA LLC or Texas Self-Directed IRA LLC.  While an IRA owns the LLC through the purchase of membership units, it is important to note that the same prohibited transaction rules applicable to the IRA generally apply to the IRA owned LLC.

By using this retirement structure, you can diversify your investment opportunities and invest outside of stocks, bonds, mutual funds and other traditional assets.  This self-directed plan gives you more control over your retirement funds.

Begin making non-traditional investments, such as:

  • Real Estate
  • Tax Liens
  • Precious Metals
  • Private Businesses
  • Promissory Notes

 

WHY A TEXAS SELF-DIRECTED IRA?

There are many reasons why the Texas Self-Directed IRA LLC is the investment vehicle of choice for investing retirement funds, including the following:

  • Alternative Investments

Besides still retaining the option to invest in equities (stocks and mutual funds), since 2002 the Self-Directed IRA Owned LLC has steadily grown in popularity as the common form of business for placing real estate purchases in addition to tax liens, precious metals, trust deeds and private company shares, to name a few.

A Checkbook Self-Directed IRA LLC is manager managed as opposed to member managed.  As such, as the named LLC manager, you are in full control over placing the Texas Checkbook IRA LLC investments in any investment not prohibited under the IRS regulations.  Texas Self-Directed IRA LLC investment purchases are generally made by writing a check from the LLC checking account and processed in the name of the LLC.

  • Benefits of using a Texas Self-Directed IRA LLC

Liability protection that comes with an LLC, you can name the LLC any name you wish, clients can invest quickly and confidently, most realtors, title companies, investment firms are used to LLC’s and much lower fees because the client is doing the paperwork, due diligence, etc.

It's all About Tax-Free Growth

A Self-Directed IRA LLC is a powerful and flexible retirement platform that allows for full diversification of investments and puts the IRA account holder in full control of all investment activities.

Download our new Checkbook IRA LLC Guide to find out more.

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A Variety of Investments

One of the chief benefits of directing your own retirement account is that you get to choose your investments from a wide range of options:

  • Real estate: Apartment buildings, commercial property, retail space, raw land, etc. If you want to earn an immediate income for your retirement account with your investments, rent can be one of the most powerful ways to ensure that. You can also use leverage in a Texas Self-Directed Real Estate IRA when using non-recourse loans.
  • Private IRA Lending: You can negotiate the terms, interest rate, and length of the loan, as well as other variables like the monthly payment amounts and whether the loan is secured or unsecured.
  • Private companies: Public stocks are what most people think of as “investments,” but there are also private stocks to consider. There is a lot of opportunity for growth in private company stock, but also plenty of risk to consider.
  • Tax liens: With a high rate of return, these investment types are ideal for self-directing investors with smaller accounts.
  • Precious metals: Gold, silver, platinum, palladium. These metals are famous as a “hedge” against economic downturn, which is why many people turn to them as a way to avoid putting all of their eggs in the stock market basket.
  • Single Member LLC: An investor can create an LLC to be owned by their Texas Self-Directed IRA, managing it themselves. This gives a significant degree of protection; however, you will likely want to consult with a professional to learn how to do this properly.

 

What You Can’t Do with a Texas Self-Directed IRA

As fun as it is to talk about the various options you can have with a self-directed retirement account, it should be noted that there are certain limits, as well. You cannot self-direct a retirement account to invest in life insurance, collectibles like art, gems/jewelry, coins, alcoholic beverages, and tangible personal property. As enticing as it might be to put that wine cellar under a Self-Directed IRA protection, it’s simply prohibited–so look for your protected retirement investments elsewhere.

Who You Cannot Do Business With

A disqualified person is anyone the Self-Directed IRA has decided is not “arm’s length” from the IRA.  Your IRA cannot engage in any transactions with these individuals or you risk the tax-status of your IRA.

A Disqualified Person is:

  • You
  • Your spouse
  • Any of your lineal ascendants or descendants (parents, children, grandchildren, and the spouses of children, grandchildren, etc. – including legally adopted children).
  • Any investment providers or fiduciaries of the IRA.
  • Any entity (a corporation, LLC, trust, etc.) where a disqualified person owns more than 50%.
  • Any entity (like previously listed) where the IRA account holder is an officer, director, a 10% or more shareholder, or a highly compensated employee.

 

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HOW DOES IT WORK?

After transferring retirement funds such as 401(k), 403(b), 457 plan and IRAs to the new Self-Directed IRA and then capitalizing the Self-Directed IRA Owned LLC, start placing alternative investment purchases by writing checks directly from the LLC checking account.  A Texas Self-Directed IRA LLC results in flexibility to invest retirement funds while still taking advantage of the tax benefits offered under the Traditional IRA and Roth IRA.

HOW TO GET STARTED/OPEN ACCOUNT

Step 1:  Establish a Self-Directed IRA

Process starts with the drafting of a specialized Self-Directed IRA Operating Agreement containing specific IRA language, registering the LLC with the state and obtaining an EIN from the IRS.

Step 2:  Transfer Retirement Funds

Transfer/rollover funds from former employer retirement plans or IRAs to new Self-Directed IRA custodian that allows for investing in an LLC.

Step 3:  Checking Account

As the named manager of the LLC, you establish a checking account for the LLC at any bank of your choice.

Step 4:  Funding a Self-Directed IRA LLC

The Self-Directed IRA custodian then processes the investment directive and funds the Self-Directed IRA Owned LLC by wiring the funds to the LLC checking account.

Step 5:  Investing

After the Self-Directed IRA Owned LLC checking account is funded, begin processing investment purchases.

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DISCLAIMER:  TurnKey IRA, LLC is a limited liability company and C-Corporation document preparation, filing, and do-it yourself document service, ONLY.  TurnKey IRA, LLC is NOT a law firm.  TurnKey IRA, LLC does not provide legal, financial or investment advice or services.  No attorney-client relationship exists between Client and TurnKey IRA, LLC, its management, salespersons, agents, successors and/or assigns.  If legal advice or other professional assistance is required, the services of a competent professional person should be sought.  We recommend you consult with the appropriate legal, tax, and investment professionals for advice PRIOR to making any investment decisions.