Self-Directed Roth IRAs

Everything You Need to Know about a Single Member IRA LLC

When you switch to a Self-Direction strategy for your retirement, you know that you will have one powerful thing working in your favor: control. One way to achieve this kind of control is by using a Single Member IRA LLC to manage your investments. But what exactly is this sort of arrangement, and how might it help you with your retirement planning? Here’s everything you’ll need to know:

What is a Single Member IRA LLC?

Simply put, a Single Member IRA LLC is what happens when you start an LLC (set up via your professionals) and purchase 100% of it with your IRA. This means that your Self-Directed IRA is now in technical control over the LLC, giving you the power of the checkbook. You can control the assets of the LLC and make investments from the perspective of an IRA.

As you might imagine, having control over an LLC gives you a tremendous amount of power in dictating what you invest in. It also makes investing as simple as writing a check from the LLC. But you won’t have total control. You will want to know some of the specifics of working with a Single Member IRA LLC—including its limitations—before you get stated.

What Are the Limitations of a Single Member IRA LLC Arrangement?

This is not a “workaround” that lets you break IRS rules. A Single Member IRA LLC arrangement does allow you to hold the value of an LLC within a Self-Directed retirement account, but you will still have to pay attention to retirement account restrictions, such as:

  • Prohibited transactions. When you own a retirement account, you are expected not to allow certain people to use your investments. For example, having your brother or sister stay in a piece of real estate you own within a Self-Directed IRA would count as a prohibited transaction. Stick to the same rules for assets owned by your LLC, as these are still assets owned by your IRA.
  • When you use a Self-Directed IRA without the LLC as an intermediary, you’ll have some advantages. For example, when you work with American IRA, we as a Self-Directed IRA administration firm can review vesting documents, receive income on behalf of the IRA, and pay expenses on your behalf. Using an LLC, you’ll be handling all of this yourself. As the old saying goes, the added freedom of an LLC also means added responsibility.

Is the Single Member IRA LLC Right for You?

Knowing what you now know about a Single Member IRA LLC, the question becomes whether this is the right arrangement for your retirement plan. The truth is that everyone’s situation is different. For many investors, the act of Self-Directing is usually enough freedom. It means that they will be picking their own investments—retirement assets, tax liens, precious metals, and the like. And it also means that they’ll have more control than they are used to.

A Single Member IRA LLC ramps up this control even more. You will be responsible for complying with all IRS rules and regulations. If you’re experienced with LLC management and retirement accounts, that’s likely not a problem. But if you quickly feel overwhelmed by paperwork, it’s probably not the best course for you. There are alternatives to Single Member IRA LLCs, such as simply using a Self-Directed Real Estate IRA (an IRA you use for investing in real estate directly), that will be much more intuitive.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at