IRA Financial Trust Company is one of the few IRA Custodians in the country that specializes in establishing Self-Directed IRA with Checkbook Control accounts.
IRA Financial Trust Company was founded by tax attorneys who worked at some of the largest law form in the world, including White & Case LLP and Dewey and LeBoeuf LLP and have helped over 15,500 clients self-direct their retirement funds through their ownership in the IRA Financial Group LLC.
What is a Self-Directed IRA LLC with Checkbook Control?
A Self-Directed IRA LLC is a type of IRA that allows the IRA holder (you) to gain control over your retirement funds so you have the ability to self-direct the type investments that you want to make using your retirement funds. With a traditional Self-Directed IRA, you, as the IRA holder, must direct the IRA custodian to make the investment you wish to make using your retirement funds, which often triggers high custodian fees and transaction delays. Whereas, with a Self-Directed IRA LLC with Checkbook Control, you, as the IRA LLC manager, will have the ability to make traditional investments (stocks, mutual funds) as well as non-traditional investments (real estate, precious metals, etc) tax-free and without custodian consent.
The Self-Directed IRA LLC "Checkbook Control" Structure is IRS and tax court approved. The idea of using an entity owned by an IRA to make investments was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in holding against the IRS, ruled that the capitalization of a new entity by an IRA for making IRA related investments was a permitted transaction and not prohibited pursuant to Code Section 4975. The Swanson Case was later affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011. However, only until recently, did the Tax Court confirm that the use of a newly established Limited Liability Company (“LLC”) wholly owned by an IRA and managed by the IRA holder would not trigger a prohibited transaction. In October 2013, the Tax Court in T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M) (“TC Memo 2013-245”) held that establishing a special purpose Limited Liability Company (“LLC”) to make an investment did not trigger a prohibited transaction, as a newly established LLC cannot be deemed a disqualified person pursuant to Internal Revenue Code Section 4975.
Unlike a custodian controlled Self-Directed IRA which would require IRA Financial Trust, as the IRA custodian, to be directly involved in every facet of the IRA transaction, a Self-Directed IRA LLC with Checkbook Control will allow you to buy real estate or make other investments by simply writing a check straight from the LLC bank account. With a Self-Directed IRA LLC, a special purpose Limited Liability Company (“LLC”) is established that is owned by the IRA (care of the IRA custodian) and managed by you or any third-party. As manager of the IRA LLC, the IRA holder (you) will have total control over the IRA assets to make the investments you want and understand.
By establishing a Self-Directed IRA Checkbook Control account with IRA Financial Trust you will have total control to make any approved investment, including a real estate purchase, pay for improvements, and then sell the property without ever talking to the IRA custodian. Since all your IRA funds will be held at a local bank in the name of the Self-Directed IRA LLC, all you would need to do to engage in a real estate transaction or other investment is write a check straight from the IRA LLC account or simply wire the funds from the IRA LLC bank account. You will not be required to seek the consent of IRA Financial Trust – the IRA custodian – to make an IRA investment or need it to sign any transaction or investment related documentation. Instead, with a Checkbook Control IRA, as manager of the IRA LLC, you will be able to execute the IRA investment by simply writing a check.
The following are a number of the benefits of using a Self-Directed IRA LLC:
“Checkbook Control”: With a Self-Directed IRA LLC with Checkbook Control, as the IRA LLC manager (the IRA care of the custodian will be the owner/member of the LLC), you will no longer have to get each investment approved by IRA Financial Trust – the IRA custodian of your account. Instead, as manager of the Self-Directed IRA LLC, all decisions are truly yours. To make an investment, simply right a check and use the funds straight from your Self-Directed IRA LLC bank account.
Invest in Real Estate & much more Tax-Free: With a Self-Directed IRA LLC with Checkbook Control, you will be able to invest in almost any type of investment opportunity that you discover, including real estate; your only limit is your imagination. The income and gains from these investments will flow back into your IRA tax-free.
Speed & Cost Effective: With a Self-Directed IRA LLC, you will have the power to act quickly on a potential investment opportunity in a cost effective setting. When you find an investment that you want to make with your IRA funds, as manager of the Self-Directed LLC, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA LLC allows you to eliminate delays enabling you to act quickly when the right investment opportunity presents itself.
Tax Deferral: With the Self-Directed IRA LLC structure, all income and gains from IRA investments will generally flow back to your Self-Directed IRA LLC tax-free because an LLC is treated as a pass-through entity for federal income tax purposes. The IRA, as the member of the LLC, is a tax-exempt party pursuant to Internal Revenue Code Section 408. All income and gains of the LLC will generally flow-through to the IRA tax-free!
The Self-Directed IRA LLC, allows the IRA holder to:
- Use the same Self-Directed IRA LLC to purchase real estate, private mortgages, gold and stocks, bonds and mutual funds inside the same plan and generate profits tax-free
- Purchase real estate foreclosures and tax liens on the spot, or make personal loans by simply writing a check and generate profits tax-free
- Buy your retirement home or vacation property now at today’s prices, rent it out or sell and generate tax-free income or gains
- Diversify your retirement portfolio and invest in almost any type of investment tax-free
- Take control of your retirement funds and hold them at a local bank or credit union
- Make a real estate or other investment by simply writing a check – it is that easy
- Generate tax-free income and shield your retirement assets from creditors or bankruptcy!
To learn more about what type of Self-Directed IRA account will best suit your retirement and investment needs, please contact a Self-Directed retirement expert at 1-800-472-1043.