What can I invest in if I have a Self-Directed IRA LLC?
Where to begin? The sky is virtually the limit. Gone are the
restrictions your traditional broker has place upon your IRA. Are you ready to
invest your IRA in:
I’ve never heard of this before. Is it new?
No.
Investments in real estate, non-traditional investments and LLCs have been
allowed since the creation of the LLC in the 1970. However, out of the two
TRILLION dollars held in retirement accounts, only about 2% are invested outside
of stocks and bonds. Why? Because people don’t know they have other options. Who
would tell you? Your stock broker? Well, now you know what your options are. The
secret is out of the bag.
Are there going to be taxes and penalties when I move my IRA into
the Self-Directed IRA LLC?
Absolutely not! You are not taking money out of your IRA; Rather,
you are investing it in another way. You are investing in the LLC and then the
LLC is investing in Real Estate.
What can I move into the Self-Directed IRA LLC?
Can I buy a fixer-upper, use the IRA money to fix it up and then be
the property manager?
Yes.
With the Self-Directed IRA LLC you can do all of these things. If you just have
a self-directed IRA with a traditional custodian, NO.
What is meant by “checkbook control”?
Checkbook control means that YOU are the signer of the checks. You
have the ability to make the investment decision, sign the contract and then
write the check for the investment. You are truly in control.
Can I get a loan for property owned by my Self-Directed IRA
LLC?
Yes.
You will need to get a non-recourse type of loan. However, when you receive a
loan unrelated debt financing income tax will apply.
What are Prohibited Transactions?
An
understanding of prohibited transactions is very important. The IRS defines a
prohibited transaction as follows: “Generally a prohibited transaction is any
improper use of your IRA account or annuity by you, your beneficiary or any
disqualified person. Disqualified persons include your fiduciary and members or
your family (spouse, ancestor, linear descendant, and any spouse of linear
descendant).” IRS Publication 590
IRC
4975 is the section that lays out the rules on prohibited transactions.
Prohibited transactions generally involve one of the following: (1) doing
business with a disqualified person; (2) benefiting someone other than the IRA;
(3) loaning money to a disqualified person; or (4) investing in a prohibited
investment.
You
need to make sure that it is your IRA that benefits from a transaction rather
than you personally. Beware of any “self dealing” transactions.
Are there any Prohibited Investments?
The
Internal Revenue Code outlines the following types of investments as not
allowed:
How do I know if the Self-Directed IRA LLC is right for
me?
Are
you tired of having your investments restricted to stocks, bonds and mutual
funds? Are you ready to invest in real estate or real estate related
investments? Do you want checkbook control? Are you ready for better returns
than you’ve been getting? Are you ready to see your retirement increase to the
point where you can retire? Are you ready to be in control? If the answer to any
of these questions is yes, you are ready for the Self-Directed IRA
LLC.