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 Ohio 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:
There are many reasons why the Ohio Self-Directed IRA LLC is the investment vehicle of choice for investing retirement funds, including the following:
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 Ohio Checkbook IRA LLC investments in any investment not prohibited under the IRS regulations. Ohio 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.
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.
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:
What You Can’t Do with an Ohio 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:
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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. An Ohio 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.
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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