Single-Member LLC

Individuals may own a single-member limited liability company (LLC) inside a retirement account by opening a business checking account in the name of the LLC and use that account to invest retirement funds. This allows the account holder to have immediate access to retirement account funds when owned by a retirement account such as an IRA or Solo 401(k).

When used correctly, the account holder has limited liability from claims and saves on transaction and check fees, but 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.

Kingdom Trust does not offer single-member LLCs but allows single-member LLCs in accounts under certain circumstances.

Investing may seem simpler and the account holder might save on administrative costs, but IRA-owned single-member LLCs are usually more complex than other self-directed investments.

The account holder is responsible for the creation of the LLC and its supporting documentation and for finding a manager to manage the LLC. For more about Kingdom Trust’s single-member LLC requirements, click here.

The IRS has made it clear to their examiners that single-member LLC structures are ripe for abuse and may be the source of code violations and prohibited transactions and have encouraged their examiners to look at them where they find them.

With control comes responsibility. Kingdom Trust does not provide investment, legal or tax advice, so an investor looking to structure his or her Self-Directed IRA or another retirement account in this fashion should do the proper research and employ the services of a tax or legal professional well versed in single-member LLCs inside retirement accounts. Structured correctly, though, this can be a viable investment structure.