A Self-Directed SEP IRA might sound complicated. But you’d be surprised. Using a Self-Directed SEP IRA, especially with an LLC within it, can be a powerful way for investors to make flexible, wide-ranging investments in a retirement account. But how does it work? And what are the benefits of working this way? Let’s zoom in.

What Is a Self-Directed SEP IRA LLC?

A SEP (Simplified Employee Pension) IRA is a type of retirement account. And it’s designed for self-employed individuals and small business owners. A SEP IRA allows for larger annual contributions than traditional or Roth IRAs, making it especially attractive for entrepreneurs who want to boost their retirement savings. A Self-Directed SEP IRA takes this a step further, though. It gives account holders the ability to invest in a wider range of assets, including real estate, private equity, precious metals, and more.

And what about the LLC? By adding an LLC structure to a Self-Directed SEP IRA, entrepreneurs can take advantage of Checkbook Control, which allows them to make investment decisions directly from the LLC’s bank account. This eliminates the need for custodian approval. That makes your investments faster and more flexible.

High Contribution Limits for Entrepreneurs

One of the biggest advantages of a SEP IRA is its high contribution limits, which can be significantly higher than those of a traditional or Roth IRA. Of course, these contribution limits are changing all the time. But glance at the current year contribution limits and you’ll likely find how much more advantageous they are, especially if you have a high income as an entrepreneur.

By setting up a Self-Directed SEP IRA LLC, business owners can contribute these higher limits, then invest those funds in a variety of alternative assets. Entrepreneurs can then build a retirement portfolio diversified beyond stocks and bonds.

Flexibility with Checkbook Control

Perhaps the most compelling reason to opt for a Self-Directed SEP IRA LLC? The added flexibility of Checkbook Control. In a standard Self-Directed SEP IRA, every investment decision requires approval from a custodian. That’s great and all, but what if you need to move more quickly?

With a Self-Directed SEP IRA LLC, the IRA will own the LLC, and you, as the manager, have direct control over its bank account. This means you can write checks and make investments immediately. You won’t have to go through the custodian for approval.

For entrepreneurs, this level of control is invaluable. If you’re investing in fast-moving markets like real estate, having the ability to act quickly can make the difference between securing a great deal or missing out. Checkbook Control also allows for lower transaction costs. After all, you won’t need to pay custodian fees for every investment move.

Tax Benefits for Entrepreneurs

In addition to investment flexibility, the Self-Directed SEP IRA LLC comes with serious tax benefits. Contributions made to a SEP IRA are tax-deductible, reducing your taxable income in the year they are made. This allows entrepreneurs to lower their overall tax burden while still saving aggressively for retirement.

All investments made within the Self-Directed SEP IRA LLC grow tax-deferred. This means you won’t pay taxes on any earnings until you withdraw the funds in retirement. For entrepreneurs in high-income brackets, this tax deferral can be a significant advantage, allowing your investments to compound without the drag of annual taxes. Want to know how it works? Ready to learn more and potentially open a Self-Directed SEP IRA with the goal of having an LLC in it? Reach out to us here at American IRA at 866-7500-IRA and we’ll be glad to talk you through our process.