Form a Limited Liability Company (LLC)

 A Limited Liability Company (LLC) is a business entity that is a hybrid of a corporation and a partnership. LLCs provide limited liability protection to its owners. Typically, the owners (members) are not personally responsible for the debts and liabilities of the business; therefore, creditors cannot pursue owners’ personal assets (such as a house or car) to pay business debts. LLC’s typically do not pay taxes at the business level. Any business income or loss is “passed-through” to the owners and reported on the owners’ personal income tax returns. Any tax due is then paid at the individual level. This is favorable as the LLC itself will not pay any taxes; rather, it will be the owners of the LLC that pay the taxes.

Briefly, an LLC is a separate legal entity whose tax liability passes through to the owners of the LLC even though the funds might, at the manager’s discretion, remain in the LLC. Therefore no taxes will be owed by you for your IRA-LLC unless you elect to take a distribution from the plan.

In order to have checkbook control of your IRA you must use an LLC. You could simply transfer your IRA to a IRA Custodian that allows a Self-Directed IRA and stop there. When you are ready to invest you submit your request to the custodian and once approved it is funded. This does not give you checkbook control of your funds. Your custodian has control.

You will be charged a fee each time you make a request for this approval process.

When you sell the asset held in your IRA  you will be charged another additional fee. Each asset you own in your account will require an annual fee as well. You can see that if you own several assets in your account and you buy and sell often, the fees can get expensive. Also the time required for the approval process can be a major problem if you find a real estate or other transaction that needs to close quickly.

Using a Self Directed IRA LLC

IMPORTANT: When your IRA invests in your Self Directed IRA LLC you only pay the custodian asset fees for that one asset – the LLC.

Your Self Directed IRA LLC can then invest directly as you see fit as Manager.

There is no custodian approval process and no additional custodian fees for each asset purchased or sold by the LLC

When an opportunity arises all you have to do is write a check as Manager of the LLC..

This is extremely important to be able to take advantage of opportunities as an investor.

Another important reason to invest through an LLC is asset protection. In many states, if a judgment is entered against you a creditor may be able to seize or attach your IRA assets. When the investment is made inside an LLC this is not the case. If a judgment is rendered against you the judgment holder will get a charging order in most states. He will not be able to attach the assets of the LLC but will have to wait for a distribution of those assets. If there is no distribution then the creditor receives nothing. Also the creditor may have to pay taxes on profits that the LLC earns but does not distribute. This makes the IRA LLC an unattractive target for lawsuits.

The IRA that owns the LLC that in turn owns the assets offers the widest choice of investments available and also gives the best asset protection. With a Self Directed IRA LLC you can have strong asset protection and checkbook control of your retirement account.


There are specific requirements for forming a Self Directed IRA LLC

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Grapevine, TX

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