It’s a simple arrangement, when you think about it. You hold an LLC within a Self-Directed IRA. That LLC has a checking account. The control of that checking account then reverts to the LLC owner, which is the IRA. And since you own that IRA, that means you’ll have checkbook control within your retirement account, giving you the freedom and flexibility to invest retirement assets with ease.

However, there’s one thing that trips up many investors: the idea of setting up that LLC in the first place. You’ll likely have to register it with your local state, which may require setting up an LLC Operating Agreement. This agreement establishes the basic structure of the LLC. And if you don’t handle it right, you may not get the proper company structure you need to exercise checkbook control in the first place. With that in mind, let’s look at what every investor will need in a Self-Directed IRA LLC Operating Agreement. That way, you can establish the right LLC so you can make retirement investing a breeze.

Basic Ingredients For Your Self-Directed IRA LLC Operating Agreement

First, let’s look at the basic ingredients each of these agreements should have.

• LLC Name
• LLC Purpose. Establish that the LLC will be for the purpose of holding investments for the Self-Directed IRA
• Membership and ownership. For investing purposes within an IRA, it will need to be a Single Member LLC—with the Self-Directed IRA owning 100% of the LLC. This part of the operating agreement will establish the ownership interest, indicating that there aren’t any partners or additional members.
• Management structure. The IRA owner will typically act as the manager. The structure of the agreement will outline the duties and responsibilities of the manager. For example, you might emphasize that the management will require the account to adhere to IRS rules and regulations as it relates to retirement investing.
• Distribution of profits. All profits and losses will be allocated to the Self-Directed IRA, for example. This will help lay out the structure that determines how the LLC will function.
• Tax treatment. You may want to mention that your Self-Directed IRA LLC is a disregarded entity for tax purposes. This is typically how Single Member LLCs function.

You’ll find that for Single Member LLCs, the Operating Agreement can be relatively simple and straightforward. For example, you don’t have to get complicated about meeting requirements and voting rights, which would be required if you were setting up a more complicated business structure with multiple parties and owners.

How to Simplify the Self-Directed IRA LLC Operating Agreement Process

Does it sound like a lot? After all, we mentioned those were “basic ingredients” for your operating agreement, yet there are seven distinct points there. And each of them might take more work than you anticipated.

That’s where having a Self-Directed IRA administration firm can help. A Self-Directed IRA administration firm isn’t there to make decisions for you. But they can help you with the paperwork to help you set up a Self-Directed IRA LLC the right way. You’ll learn how your state requirements should affect the LLC, for example. And you’ll know the basic structure you need in place so you can start using that LLC’s checkbook to make Self-Directed IRA retirement investments.

It doesn’t have to be an overwhelming process. In fact, once it’s done, it can be extremely low-maintenance because you have checkbook control. If you’re interested in setting up a Self-Directed IRA LLC for yourself, reach out to us here at American IRA by dialing 866-7500-IRA.