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What is a Checkbook Control IRA?
What is a Checkbook Control IRA?
A Checkbook Control IRA is an IRS and tax court approved structure. It allows you to use your IRA funds to make almost any investment. This includes real estate, tax liens, precious metals and much more.
An LLC that is solely owned by an IRA/401(k) is considered a Single Member LLC for tax filing purposes; therefore, the Checkbook Self-Directed IRA LLC does not file a tax return. However, the IRA is subject to filing a tax return (Form 990T) in the event that UBTI or UDFI taxes are generated.
Why a Checkbook Control IRA?
There are many reasons why the Checkbook Control IRA is the investment vehicle of choice for investing retirement funds, including the following:
- Alternative Investments: Besides still retaining the option to invest in equities (stocks and mutual funds), since 2002 the Checkbook Control IRA has steadily grown in popularity as a form for placing real estate purchases in addition to tax liens, precious metals, trust deeds and private company shares, to name a few in Self-Directed IRAs.
- Checkbook Control over Retirement Funds: A Checkbook Control IRA is manager managed as opposed to member managed. As such, as the named LLC manager, you are in full control over placing the Checkbook Control IRA investments in any investment not prohibited under the IRS regulations. Checkbook Control IRA investment purchases are generally made by writing a check from the LLC checking account and processes in the name of the LLC.
- Benefits of using a Checkbook Control IRA: Liability protection that comes with an LLC, you can name the LLC any name you wish, clients can invest quickly and confidently, most realtors, title companies, investment firms are used to LLC’s and much lower fees because the client is doing the paperwork, due diligence, etc.
How does it work?
After transferring retirement funds such as 401(k), 403(b), 457 plan and IRAs to the new Self-Directed IRA and the capitalizing the Checkbook Control IRA, start placing alternative investment purchases by writing checks directly from the LLC checking account. A Checkbook Control IRA results in flexibility to invest retirement funds while still taking advantage of the tax benefits offered under the Traditional and Roth IRAs.
Types of Investments
In addition to stocks, bonds, mutual funds and other securities a Checkbook Control IRA may be invested in the following types of investments:
Real Estate
- Residential Property
- Commercial Property
- Developed Land
- Foreclosures
- Rehabs/Flips
- Mobile Homes
- REITs
Promissory Notes & Tax Deeds
- Mortgages
- Deeds of Trust
- Secured Promissory Notes
- Unsecured Promissory Notes
- Tax Lien
- Tax Deed
Other Types of Investments:
- Precious Metals
- Annuities
- Foreign Currency Exchange
- Equipment Leasing
- Private Equity
- Equipment Leasing
- Structured Settlements
- Cryptocurrency
How to Get Started
Step 1: Establish a Self-Directed IRA
Process starts with the drafting of a specialized Self-Directed IRA Operating Agreement containing specific IRA language, registering the LLC with the state and obtaining EIN from the IRS.
Step 2: Transfer Retirement Funds
Transfer/roll over funds from former employer retirement plans or IRAs to new Self-Directed IRA Custodian that allows for investing in an LLC.
Step 3: Checking Account
As the named manager of the LLC, you establish a checking account for the LLC at any bank of your choice.
Step 4: Funding a Checkbook Control IRA
The Self-Directed IRA custodian then processes the investment directive and funds the Checkbook Control IRA by wiring the funds to the LLC checking account.
Step 5: Start Investing
After the Checkbook Control IRA checking account is funded, begin processing investment purchases.
© 2019 American IRA
Custodian: New Vision Trust Company, A State Chartered South Dakota Trust Company
401 E. 8th Street, Suite 200R, Sioux Falls, South Dakota 57103
American IRA, LLC, a North Carolina limited liability company (“Administrator”), serves as a Third Party Administrator (“TPA”) providing educational and administrative services on behalf of the Custodian, New Vision Trust Company, a state chartered South Dakota Trust Company (“Custodian”).
DISCLAIMER: As a Self-Directed IRA administrator we are a neutral third party. We do not make any recommendations to any person or entity associated with investments of any type (including financial representatives, investment promoters or companies, or employees, agents or representatives associated with these firms). We are not responsible for and are not bound by any statements, representations, warranties or agreements made by any such person or entity and do not provide any recommendation on the quality, profitability or reputability of any investment, individual or company. The terms “we” and “us” refer to American IRA, with offices located in Asheville, NC and Charlotte, NC.