Having your own Self-Directed IRA allows you to invest in real estate, business, and other opportunities not directly available through Conventional IRA or 401K plans.
By establishing an LLC for this purpose, you maintain full control over your investment decisions (within standard IRS Guidelines). Checkbook Control IRAs require a specialized operating agreement.
As the owner of your Self-Directed IRA, you can be designated as the “Manager” of your LLC. This enables you to establish a bank account with check writing privileges so that you can handle your own eligible real estate investments. Having an LLC can also save time, which is often a very important factor in real estate.
There are often multiple offers for properties which are an exceptional deal. Cash is often king when it comes to sellers deciding on which offer to take. If you have enough cash available in your Self-Directed IRA account, you would be able to offer and produce an immediate cash payment.
Without an LLC, it could delay the availability of a check for payment by several days. In many cases, not having the cash immediately available could cause the seller to go with another buyer that has the cash on hand immediately.
When you have your LLC in place to operate your investments, you would already have established check writing privileges on your account through the bank or financial institution which hosts your LLC account.
Once you have your bank checking account for the LLC established and properly assigned to your Self-Directed IRA, the bank will provide you with a checkbook so that you can pay for your investment(s) directly from this account.
By doing this, you enjoy the legal protection which an LLC provides, while maintaining the ability to control your investing with a plan to increase your retirement funds more quickly than through a conventional IRA.
This is the case whether your LLC makes one investment or diversifies into several opportunities.
Suppose that, over the course of two years you have invested in five separate real estate transactions. Of course, each property requires its own paperwork and record keeping along with possible property management and maintenance costs. Even with several properties owned by the LLC, your LLC counts as the sole entity to your Self-Directed IRA.
Operating an LLC for this purpose is not limited to the purchase of real estate. The same situation applies in the event your Self-Directed IRA is for the purpose of private money lending, the purchase of precious metals, or other opportunities which are allowed.
LLC is an abbreviation for Limited Liability Corporation. As the owner, you are generally not personally liable for debts and other liabilities incurred.
Again, you are not able to accomplish this with only a Traditional IRA or 401K. However, you may be able to rollover and existing Traditional IRA or 401K plan into a Self-Directed IRA and take advantage of this opportunity. Your LLC will also have its own tax identification number.
Interested in learning more about Self-Directed IRAs or LLCs? Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation. Download our free guides or visit us online at www.AmericanIRA.com.