With a Single Member LLC within your IRA, you can do amazing things. That LLC’s checkbook is one your IRA controls, meaning you can write checks to make flexible, fast investments within your retirement account. And when you Self-Direct your IRA, you can invest in a huge range of different assets, including everything from real estate to private notes. But a Self-Directed IRA LLC still sounds a bit too complicated for many. So with that in mind, let’s dive into what this LLC is, what it isn’t, and how you can set one up yourself.
The Self-Directed IRA LLC Setup: Essential Information
First: what is a Self-Directed IRA LLC? The LLC is a Limited Liability Company, a legal structure for your business. It’s one of the simplest ways to register a business with your local state. For example, its tax structure is often “pass-through,” in the case of a Single Member LLC, which means you don’t have to file a separate tax return for the company. This helps keep things nice and simple for reporting purposes, which in turn keeps things nice and simple for your IRA.
Since the LLC is an independent entity, it gets to have its own checkbook—or checking account. This is under the umbrella of your IRA, of course, so you can’t use this checking account at will. You’ll still have to keep within the bounds of retirement rules. However, because the checking account needs to have someone writing the checks, and that control reverts to your IRA, you’re the one who signs the checks. And this makes for some great options when it comes to retirement investing.
Why Set up a Self-Directed IRA LLC?
In a word? Control. You’ll have much more of it. With a Self-Directed IRA and an LLC checkbook, you’ll be able to tap into the broader range of retirement investments available with ease. You can invest in private businesses, startups, precious metals, real estate—and you can do all of that with the tax protections that come with a retirement account.
Key Steps to the Self-Directed IRA LLC Setup
Think of the LLC as exactly what it is: a business you need to register. But back up first. You’ll want to choose a Self-Directed IRA custodian, because they might be able to help you with some paperwork as you go. You’ll fund the Self-Directed IRA and then concentrate on forming the LLC.
Setting up the LLC as a Single Member LLC is crucial, because your IRA will be the single member. Then, you’ll need to obtain an EIN (employer identification number) for the LLC. You’ll also need to draft an operating agreement for the LLC, which may be a requirement of your state. This operating agreement will line out how the ownership of the LLC works and how the LLC will function. The good news year: with a Single Member LLC, you’re going to find it easy to draw this operating agreement, because the terms of ownership will be extremely simple.
Finally, the last piece: opening a checking account for the LLC. This is when you can start taking the bull by the horns and investing on your terms. Yes, you’ll still have to follow retirement rules, and yes, those rules may prohibit investing in things like life insurance policies, but you probably won’t find that much of an impediment. You may be surprised to discover how much freedom you have.
Interested in learning more? Reach out to TurnKey IRA today by dialing our toll free number at 844-8876-IRA.
