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The IRA Owned LLC, also referred to as the “Checkbook IRA,” is a common investment strategy for many investors. There are several ways to invest with a Self-Directed IRA, one of which is to invest in an LLC with retirement funds.
When used correctly, the account holder has limited liability from claims and saves on transaction and check fees. However, he or she remains subject to all retirement account rules and regulations. In an IRA-owned single-member LLC, for example, an account holder will open a checking account in the name of a single-member LLC and use that account to invest retirement funds. Below are 3 facts to be aware of regarding this investment option.
The LLC is an investment held in the retirement account. The LLC is owned by the IRA—not the other way around. Any investments owned by the LLC are indirectly held by the retirement account.
All purchases, sales, and asset management within the LLC, proceed without the IRA custodian’s involvement. With this investment option, the custodian has very little involvement. Most of the responsibility shifts to the account holder and or manager of the LLC.
Checkbook control is a strategy for Self-Directed IRA investing. The same rules that apply to your IRA will apply to using checkbook control. For instance, checks cannot be written for personal use.
The account holder is responsible for the creation of the LLC, the supporting documentation and for finding an LLC manager. Please reference the Kingdom Trust single-member LLC investment requirements for more information. In addition, the IRA Holder and the LLC manager must understand all related IRS rules and regulations.
Unlike with a direct investment, the IRA custodian won’t have access to information regarding the underlying assets owned by the LLC. The account holder will be required to provide Kingdom Trust with an updated year-end market valuation. Whether you prefer to invest directly with a Self-Directed IRA or indirectly with a single-member LLC, Kingdom Trust is available to help facilitate your investment request.
Note that Kingdom Trust does not provide investment advice nor do we offer any type of tax or legal advice. We are a neutral third party to any type of investment decision or opportunity.
We strongly recommend you make any investment decisions with the help of a financial team that includes, but may not be limited to, an accountant, a lawyer, a financial planner and any other professional who specializes in the type of asset in which you are considering investing.