Self-Directed IRA LLC

Investing in a Self-Directed IRA LLC: How Does It Work?

Using a Self-Directed IRA opens up all sorts of possibilities for investors. These investors can use their retirement account to invest in nontraditional assets from precious metals and tax liens to real estate of a wide variety. But one reason investors use a Self-Directed IRA is to invest in an LLC. In this arrangement, an investor may have plenty of flexibility for getting things done. But how does it work, and what does the process look like? Here is what you will need to know.

The “Checkbook IRA” Arrangement

One of the most popular ways to invest in retirement with a Self-Directed IRA is to use an LLC to exercise checkbook control within the retirement account. This is a flexible state of affairs that allows an investor to make investments in a fast and flexible way. But what is it exactly, and how does it work?

The process is relatively simple and straightforward to understand. Within a Checkbook IRA, an investor opens a Single Member LLC according to their local state laws. This LLC is then held within the Self-Directed IRA. Because of this arrangement, the IRA itself technically owns the LLC. However, since control reverts back to the investor, the investor gets to make decisions.

This is not a way for investors to skip the usual process of retirement investing, but simply one of the easiest and most flexible ways to invest once it has been properly set up. This strategy also does not make it so investors can break the rules of retirement investing. Rather, it is a powerful way for investors to take control of their financial decisions. Those decisions will still have to fall under IRS regulations.

How Does a Self-Directed IRA LLC Work?

An LLC has to be registered with the state of the investor in order to be considered a valid legal entity. It is not like a sole proprietorship. However, it also comes with additional legal protections that often make it appealing to investors who need that additional layer between their investments and their personal property.

It is true that within a Self-Directed IRA, there is an additional layer already. Retirement assets are different than personal assets. However, an investor might choose to invest with an LLC within a Self-Directed IRA for these additional protections and for the investing style that might suit them. Using the bank account of the LLC, an investor can exercise “Checkbook control” in a way that is far more intuitive to many investors.

This is an arrangement that comes with a lot more freedom and a lot more personal responsibility. Investors do have to be sure that they start off on the right foot—first, by using an LLC that has been legally and properly established. A Self-Directed IRA administration firm like American IRA can help with that process, simplifying the paperwork involved.

The overall process ends up being a lot more intensive during the creation of the LLC. However, over the long-term, it means that the investor has plenty of options for investing.

Using a Self-Directed IRA

A Self-Directed IRA can be a powerful investment vehicle for many reasons. One of those reasons is that a Self-Directed IRA makes it possible for investors to use nontraditional retirement asset classes like real estate and private companies. And for many reasons, a Self-Directed IRA LLC can be a powerful way to invest. However, it is always good to know what you are getting into first. What is the process? What does it look like? Know the answers to these questions first.

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