It’s one of the most powerful strategies you might not be aware of. The Self-Directed IRA LLC. The idea is simple. When you have a Self-Directed IRA, you can build a powerful way of investing, one that doesn’t require you stick to the recommended stocks and bonds available at a traditional brokerage. You can hold other assets this way, including real estate, precious metals, and yes, Single Member LLCs.

And when you hold an LLC, your business will likely have a checkbook. This means your IRA owns an LLC which owns a checkbook. From that checkbook, you can then make retirement investments with the ease of an ordinary purchase. No constant checking with the IRA custodian, no lengthy paperwork. Just quick investments and plenty of flexibility.

However, we should note that you do need a valid LLC to make this setup work for you. Here’s what you’ll need to know if you’re setting up your first Self-Directed IRA LLC to get more freedom in your retirement account.

The Basics of the Self-Directed IRA LLC

A Self-Directed IRA LLC combines the benefits of a Self-Directed IRA with the control of a Limited Liability Company (LLC). As mentioned above, this structure allows you to make investment decisions quickly and efficiently, without waiting for custodian approval. With checkbook control, you can write checks directly from your IRA LLC bank account. If a sudden opportunity arises, your checkbook is ready for you—and you can quickly take action.

This will be a Single Member LLC, with your IRA serving as the owner of the LLC. This is the most straightforward way to build your business, because your IRA doesn’t have to share partnership of the LLC. Instead, it owns it outright.

How to Set Up Your Self-Directed IRA LLC

Once you know that you want an LLC within your IRA so you can make investments this way, the next steps become more obvious. You know you need an LLC. You need to set it up properly. The fastest way to start is to reach out to a Self-Directed IRA administration firm like American IRA, who can help. But we also find it helps to explain the steps of forming the LLC properly:

• Choose a Self-Directed IRA custodian: The first step is to select a custodian who can handle your Self-Directed IRAs. This custodian will hold your IRA funds and help ensure that your account complies with IRS regulations. (To keep this part easy, choose American IRA.)
• Open a Self-Directed IRA: Once you’ve chosen a custodian, open a Self-Directed IRA account with them. You’ll need to fund this account by either rolling over an existing IRA or making a new contribution. You can choose a variety of accounts here, like Roth IRAs or Traditional IRAs.
• Form an LLC: Create an LLC in your state, or the state in which you plan to invest. You’ll need to choose a name for your LLC, file the necessary paperwork with your state’s Secretary of State, and pay the associated fees. Those fees will vary from state to state.
• Draft an Operating Agreement: The operating agreement will outline the management structure and operating procedures of your LLC. For Single Member LLCs, this is straightforward. But you’ll have to include specific language that complies with IRS requirements, such as stating that the LLC is owned by your Self-Directed IRA and that all profits will flow back into the IRA.
• Obtain an EIN: Apply for an Employer Identification Number (EIN) from the IRS for your LLC. This number is required to open a bank account for the LLC and to file taxes.

And that’s it. You’ll find it’s easier to establish a business than you might have thought. But if you want any guidance along the way, make sure you reach out to us here at American IRA by dialing 866-7500-IRA.