Self-Directed Checkbook IRA

What is Checkbook Control in a Self-Directed IRA?

If you want more control over your retirement, you usually sign up for a Self-Directed IRA. Doing so allows you to invest in alternative assets like real estate, tax liens, precious metals, private companies, and private notes. But what if you need an even greater deal of control over what you invest in? What if you have a lot of investing needs, so much so that maintaining control over the checkbook could make it possible for your IRA to buy up all sorts of assets? That’s where “checkbook control” in a Self-Directed IRA LLC comes in.

What is Checkbook Control?

You establish checkbook control when you establish a Self-Directed IRA LLC. In this case, the Self-Directed IRA owns the LLC—and as a business, this LLC can have a checking account. As the holder of the IRA, you then hold control over this checking account and, thereby, its checkbook.

It might sound complicated because there are a few layers to this strategy, but it’s actually far simpler than you might imagine. It’s in executing investments with the checkbook—and observing the limitations established by regulations—that the world of retirement checkbook control can get a little complicated.

Understanding the Self-Directed IRA LLC Strategy

It starts with establishing an LLC in which your IRA can invest. Technically, you are not the investor in the LLC in this case—your IRA is. Sure, your IRA will likely be the only partner/investor in the LLC, but there will still be that legal layer of separation between you and the LLC.

Like any LLC, you will have to get a tax ID for this LLC, as well as establish the Articles of Organization. As the holder of the IRA, you will be responsible for managing the checking account of the LLC, even though there’s still that technical layer between the LLC and your personal funds.

For most people with LLCs, there’s a direct step between an LLC and your own personal funds. But since the IRA is technically the holder, you will not be able to use the checkbook as freely as you would your own personal checkbook. There are still some restrictions to keep in mind.

Restrictions with the Self-Directed IRA LLC and Checkbook Control

It’s a good idea to speak with a tax advisor before you get used to making investments this way. Keep in mind that when you exercise checkbook control within a Self-Directed IRA LLC, that those investments are technically held by the IRA—and not you. This is no shortcut for tax breaks. It’s still a retirement account holding a private business, which means you will have the same restrictions in exercising control over this checkbook as you would with any retirement arrangement.

Why Use Checkbook Control with a Self-Directed IRA?

There are a few reasons you would want to use this arrangement:

  • Having the option to invest in something by writing a check makes retirement investing with this method a matter of fast and easy management. There’s no looking to a third party to handle the paperwork or the funds—you can simply have the LLC purchase an investment.
  • Low costs. Controlling everything yourself comes with responsibilities, sure. But you do not have to pay yourself administrative costs, either. Having checkbook control means more freedom and more responsibility—if you can handle both, it’s a very easy and direct way to make retirement investments.

Checkbook control gives you a lot of power and responsibility, but it can also be a simpler way to invest. 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