Not everyone thinks of an LLC as being for them. But when you use an LLC to establish a Checkbook IRA that makes it easier to invest your retirement assets? You might second-guess that assumption. With the help of an administration firm setting up your LLC, you’ll find it easy to create a Checkbook IRA so you can make fast, flexible investments with your retirement money. You’ll just need one thing: a list of key “Things to know” before you get started.
Why a Checkbook IRA LLC?
A Checkbook IRA LLC is an excellent option for retirement investors who want full control over their retirement funds. When you set up a Self-Directed IRA with an LLC, you become the manager of that LLC. That gives you the ability to write checks directly from your IRA for investments without needing custodian approval every single time. This set-up is great. It eliminates delays and fees associated with third-party custodians. It gives you much more freedom to act with speed when opportunities arise.
Setting up a Checkbook IRA LLC gives you flexibility in choosing alternative investments such as real estate, private equity, precious metals, and more. These types of investments aren’t typically available in traditional IRAs. By holding your retirement funds in an LLC, you can directly manage these investments, which often have the potential for higher returns than conventional stocks and bonds.
The Process of Setting Up a Checkbook IRA LLC
The process of establishing a Checkbook IRA LLC isn’t overly complicated, no. But it does require careful attention to detail. The first step is choosing a custodian for your Self-Directed IRA. Once you’ve chosen one, you’ll open the account and fund it with assets such as cash, stocks, or existing retirement funds from another account. After funding your IRA, you’ll then create the LLC. This will hold the assets on behalf of your retirement account.
You’ll need to work with a lawyer or a professional service provider to set up the LLC and create the operating agreement, which outlines the roles and responsibilities of the LLC members and managers. A Self-Directed IRA administration firm can help. This is where things get critical: the operating agreement must clearly establish that the LLC intends to manage retirement funds. Also, no personal transactions will occur between you and the LLC. The operating agreement ensures that the structure remains compliant with IRS regulations.
Once you’ve formed the LLC, you’ll be able to open a bank account in the name of the LLC. The funds from your Self-Directed IRA will be transferred into this account, and you’ll have direct control over your investments. This setup is what’s known as a “checkbook” because you can write checks, make wire transfers, or initiate payments for investments directly from the LLC’s account.
Compliance and Potential Pitfalls
While setting up a Checkbook IRA LLC is relatively simple, there are important rules and regulations you need to follow to ensure everything remains in compliance with IRS guidelines. One of the biggest potential pitfalls is using your Checkbook IRA LLC for personal benefit. The IRS has strict rules about transactions between the LLC and its owner, known as “self-dealing.” You can’t use the funds for personal expenses or benefits, and all transactions must be strictly for investment purposes.
Once you understand how these work in Checkbook IRAs, you’ll find it’s much easier to manage them than you thought. It all starts with working with a great IRA administration firm who can help. Reach out to us here at TurnKey IRA by dialing 844-8876-IRA (472) today.
Imagine a life where your retirement investments feel as easy to make as any other investment. Sure, rules are separating the two, but once you have a Checkbook IRA in place, you’d be surprised how natural it can feel to make retirement investments. Interested in learning more? Contact TurnKey IRA at 844-8876-IRA (472) for a free consultation. Download our free guide or visit us online at www.turnkeyira.com.
