After researching the benefits of a self-directed IRA LLC, you’ve decided to form one.
You’ve identified several IRA custodians to partner with. But you’re here now because the custodian wants to review your IRA LLC Operating Agreement, and you haven’t drafted one yet or don’t know where to begin.
You are not alone; having set up thousands of IRA LLCs for clients just like you over the past 19+ years, I caution you that this fork in the road could lead you down two different paths. One clear and well-guided path allows you to take advantage of all the benefits and flexibility your IRA LLC offers.
While one path offers a guided straight-line path to getting your IRA LLC up and running, the other path is filled with a tangled maze of uncertainty, rife with trial and error, and may have you second-guessing the warnings of your financial advisor, who begged you to keep your IRA parked with them in their small corral of investments.
I routinely speak with eager IRA investors who have part of the information needed to create their IRA LLC but only require minimal guidance to move in the right direction.
To assist these individuals, I’ve provided a clear roadmap to help you set up your IRA LLC on your own, including some essential language necessary to incorporate into the IRA LLC operating agreement.
However, after reading through the information, if you prefer to have a team of seasoned professionals with nearly 20 years of experience work with you to create your IRA LLC for you, we are happy to help. This way, you can set up your IRA LLC the right way the first time without the hassle of putting the puzzle pieces together in the right order.
We offer a comprehensive done-for-you IRA LLC service that eliminates all the burden, hassle, trial and error, and guesswork. We will take care of all the details for you.
We’ll set up your IRA LLC, handle all the necessary paperwork from beginning to end so you don’t have to worry about it, eliminate frustration, ensure compliance, and guide your steps so you don’t waste time wandering in the dark. We’ll also provide you with ongoing support and guidance, depending on your chosen package, so you can make the most of your IRA LLC in the days ahead.
Contact us today to get started. We’ll answer any questions as part of a free initial consultation. We look forward to hearing from you soon.
Choose an IRA custodian, not a trustee, to hold your self-directed IRA. You can also choose a third-party administrator. However, keep this in mind.
TPA stands for “Third-Party Administrator.” A TPA is a company or organization that provides administrative services to businesses or entities, often related to employee benefits, retirement plans, and other administrative functions. A TPA might assist with record-keeping, compliance, reporting, and other administrative tasks. Still, it typically does not hold custody of the funds, which is the role of a qualified custodian.
To maintain the tax-advantaged status of your IRA, it’s essential to have a qualified custodian oversee the assets. TPAs typically do not have the necessary custodial capabilities. Therefore, relying solely on a TPA could jeopardize your IRA’s compliance with IRS regulations.
Ensure that when you select an IRA custodian, they are knowledgeable about the IRA LLC strategy and are comfortable with you using checkbook control.
Many IRA custodians may be unaware of or support the IRA LLC approach and its legitimacy. IRA custodians who agree to support the IRA LLC may want to take precautions before you begin writing checks from your account.
Ultimately, the custodian you select shouldn’t impact how you manage your IRA LLC because the custodian doesn’t hold your cash or manage your investments. The custodian’s role in the IRA LLC strategy is limited. IRA custodians are passive actors when it comes to your IRA investments. They simply hold your LLC on behalf of your IRA and report annually to the IRS.
An IRA custodian’s fees can range dramatically, even if you participate in the IRA LLC strategy. Custodial fees can range from a couple hundred dollars to over a couple thousand dollars a year, so do your research!
It’s important to research which state is best for forming your IRA LLC. Some states have specific requirements that must be met, such as residency requirements or filing fees. It’s important to research which state is best for forming your IRA LLC.
Every state is different in terms of filing fees, corporate friendliness, asset protection, rules for compliance, and even taxes (yes, not all IRAs are immune to all taxes), depending on the state in which you file your LLC, so you will want to choose a state that is right for your investment goals.
Remember, your IRA is not meant to “do business” like a traditional LLC outside of investing to grow your retirement.
If you intend to make passive investments in multiple states, choose a low-maintenance, low-cost, and corporate-friendly state. However, if you plan on making only local investments, consider domiciling your IRA LLC in your home state. A registered agent will be required in all 50 states, so using your home state will eliminate the need to hire one.
Transferring, rolling over, and making contributions are distinct methods for funding your self directed IRA, each serving a specific purpose.
To illustrate, if you currently have an IRA, it may be advisable to perform a trustee-to-trustee transfer for enhanced security and streamlined reporting. A rollover, on the other hand, is utilized to move funds from a 401k plan into an IRA custodial cash account. Contributions, meanwhile, involve direct payments into the IRA.
When making contributions to the IRA, ensure the contributions are within the IRS annual limits and are qualified for the IRA.
Also, depending on how your IRA LLC is structured, you may be barred from making future contributions beyond your initial contribution, so know the rules and structure your IRA the right way so you don’t get caught off guard because, as we like to say, the best surprise is no surprise.
