Here is a sample of some of the questions we get when talking about checkbook control. Hope you find this helpful.
1. Why have I not heard of a Checkbook Control IRA LLC, or investing in alternative assets before?
Even though we have always been allowed to invest in alternative investments and the Stock Market since the beginning of IRAs, stock market brokers have done a good job of convincing us that our only choices in our retirement account is Stocks, Mutual Funds CDs or Bonds. In actuality, the IRS never tells what we can invest in, only what we cannot. This list is very short.
2. What are considered prohibited assets in an IRA?
IRS Section 408 tells us that we should NOT invest in Life Insurance and Collectibles. These are the only two asset classes that the IRS has identified as prohibited. So what is allowed, along with stocks, mutual funds, CD’s and bonds is real estate, promissory notes, private placements, gold bullion and silver bullion and the list goes on.
3. Who is considered a prohibited person?
The internal revenue code has identified who and what is considered a prohibited person, or prohibited entity. The list is as follows: You and your spouse, your children and your grandchildren, your parents and your grandparents and all their spouses. It also includes any business that any of those prohibited people own 50% or more of. So what does this mean? It means that our IRA cannot buy, sell, exchange or lease with any of these people. Your IRA can buy real estate, but you cannot live in that property because you are considered a prohibited person.
4. Why would I want to have checkbook control of my IRA funds?
Most people feel like their retirement accounts are out of control. For me, the number one reason to get checkbook control of my retirement funds is to have total control of the assets myself. Secondly, when you have checkbook control of your retirement funds you save money in fees imposed by your IRA account custodian. Most custodians charge your IRA account for every asset you have. When you have checkbook control of your IRA funds, your custodian only sees one asset, an LLC. Therefore your custodian only charges your IRA account for that one asset. However, the LLC can own multiple assets but the custodian only sees one asset. Your custodian will also charge you transaction fees every time you buy or sell an asset. When you have checkbook control of your retirement funds, your custodian does not make the transactions for you, so therefore you do not incur those fees.
5. What is a truly Self Directed IRA?
The only difference between a Self Directed IRA and an IRA at your local Broker is who is in control of the account. If you have a truly self directed IRA, then you are in control of the assets and the direction your IRA funds are invested.
6. What are your fees to get checkbook control?
Our fees vary based on each states filing fees. The average cost ranges from $400.00 to $900.00. This is a one-time fee to Blue Diamond Documents.
7. What states do you provide this service in?
We file LLCs in all 50 states.
8. Is Blue Diamond Documents a custodian?
We are not a custodian; however we work with a number of custodians. Call us for our list of custodians that will allow you to have checkbook control of your IRA.
9. When I have checkbook control how do I title the investments I choose?
You always want to title your LLC investments in the name of the LLC. Never in your own name. You are the manager of LLC not the owner of the LLC, the IRA owns the LLC.
10. Do I have to send all the income from the LLC back to the Custodian?
No you can let your LLC checking account build up from your LLC income and then you can reinvest it however you see fit. The only time you would need to send money back to the custodian is if you need a distribution or you are dissolving the LLC.
Contact us today if you want to learn more about taking control of your IRA.