The Checkbook IRA -
The Ultimate in Control!
If you want to own a rental property, a business, collect rents, pay utilities, repairs advertising etc. then you need a different solution. If not, then your custodian will eat you alive with their fees! You need a solution that gives you absolute control and we call this “The Checkbook IRA.” It consists of the following parts:
A Self Directed IRA:
You need to choose a custodian that allows investments in an LLC. Then you transfer funds from your current retirement account to the new IRA account at the new custodian. We suggest you thoroughly investigate each custodian, compare fees and compare limitations if investments before you decide. Make sure you do your homework because the wrong decision will not only cost you time and money, they may not be willing to cooperate with your desires.
Set up the LLC Correctly
Next, you need an LLC in a US state that doesn’t cost a fortune and offers the flexibility you need. It is imperative that the LLC be set up correctly otherwise you may be facing a mountain of penalties. We have done our research and can suggest that you skip California unless you plan to invest in that state. We have our favorite states but you need to decide what is best for you. If you make a mistake with this part you may end up paying an excessive amount of startup and annual fees. Analyze the facts and avoid the hype.
The Operating Agreement is Critical
This agreement spells out what the LLC can and cannot do. Specifically, it defines what powers the manager has and what kinds of transactions can take place between the LLC and the “disqualified” persons.
Open a bank account
In order for your LLC to buy property or other investments, it will need a bank account. In order to open the account, the LLC must obtain an Employer Identification Number (EIN)” from the IRS. The last part is to take the LLC papers and the Operating Agreement to your bank and open the account.
Start Making Investments!
Now you have full control over your investment alternatives. You can buy that property but you have to be aware of the limitations on types of investments and who you can do business with.
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