Self-Directed IRA LLC

What is a Single Member IRA LLC and How Does It Work?

When using a Self-Directed IRA, you open up your retirement accounts to all sorts of investment possibilities. That’s one of the reasons so many investors open Self-Directed IRAs in the first place—to expand their range of options into real estate, precious metals, and private stock. But there’s one other style of investing that may suit you, and you may have heard of it: owning an LLC within an IRA. This arrangement, known as a Single Member IRA LLC, can mean using funds from a Self-Directed IRA to purchase the full amount of an LLC that you’ve established with professionals.

Why do this? And how does the process work? Let’s zoom into the Single Member IRA LLC and see why so many investors like handling things this way.

What is the Single Member IRA LLC Arrangement?

First, let’s go back to the Self-Directed IRA. With a Self-Directed IRA, you can own alternative asset classes, as we’ve noted. That includes private stock in private companies. Enter the Single-Member LLC, one of the simplest company arrangements you can make. With a Self-Directed IRA, you can purchase 100% of an LLC you’ve established the right way.

Why do things this way? What if the LLC doesn’t have a lot of revenue, or might not seem like a good investment? Well, many investors use the LLC as a vehicle for investing. Single Member IRA LLCs give you checkbook control, making it easier and more flexible to handle retirement investing—as long as you manage the accounts correctly. Note: you can find out more about the rules on Single Member IRA LLCs here at our website.

How Does a Single Member IRA LLC Work?

When you have a Single Member IRA LLC, you exercise checkbook control, meaning that the control over the LLC reverts to the IRA, which you control. This makes it easier to set up investments within your retirement account using the LLC itself. This is an easy-to-use way of handling a retirement account, sure, and requires minimal administration fees once it’s set up. In other words, it’s an easy and flexible way to handle retirement investing once you’ve got it set up. However, the set-up fees are more expensive than setting up a standard, traditional Self-Directed account.

In both cases, you’re using retirement accounts to provide special tax benefits to the assets within the account. However, the advantage of the Single Member IRA LLC is control. You can quickly make investments within the LLC using checkbook control, which is appealing to investors who know a lot about retirement accounts, know what they want to invest in, and simply want to use the freedom that comes with a Self-Directed IRA.

Is Single Member IRA LLC Investing Right For You?

Before you get started, it helps to know what you’re in for. You can view much of that information here, or on our Single Member IRA LLC section of our website. However, what you really need to know is whether you’re comfortable navigating the world of retirement investing with more control. If so, you can work with a Self-Directed IRA administration firm like American IRA to ensure that you set up the Single Member IRA LLC situation the right way. This means higher set-up fees in the beginning, but lower administration fees in the long-term future.

Once you know your goals and what the rules are, it’s time to take the next steps. Reach out to us here at American IRA to get a sense of what’s involved. You can contact us at 866-7500-IRA to learn more.