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Checkbook IRA: How to take control of your retirement investments

If you want to stop relying on custodians when making investment decisions in your retirement, a checkbook IRA is best for you.



Assume you are a smart investor who has identified a number of profitable investments. But, you are being held back by your dependence on custodians and the rising administrative costs are slowing down your decision. This is exactly where checkbook control comes into play.

What is Checkbook IRA and how does it work?

The term checkbook control also known as checkbook IRA gives the self-directed IRA owner, total control over his retirement reserve by eliminating the need to depend on the custodian’s consent regarding any investment decisions. It brings you the freedom to invest in a variety of assets and the flexibility to manage your finances with ease and efficiency.

To take advantage of checkbook control, you need to establish an LLC that is owned by your retirement account and set up a business checking account in the LLC name. This account will then be linked to your self-directed IRA and you will be issued a checkbook that is directly linked to this business account. With this checkbook comes the freedom to exercise complete control over your self-directed funds.

Benefits of checkbook control

Time plays a crucial role when it comes to investing money in real estate especially when it is going up for auction. You don’t have the time to consult with the custodian and so, you lose the opportunity to invest. But, with checkbook control IRA, you don’t need to consult your custodian for making the purchase. Other advantages of using an LLC in your investment are reduced administrative costs and the flexibility to wire funds without having to go through tedious paperwork or waiting for approvals.

Investments allowed in a self-directed IRA

A self-directed LLC allows you to invest in non-traditional assets like private businesses and real estate. Other options that you can consider for investment include stocks, bonds, mutual funds, private loans, raw land, other currencies, deeds, gold, mortgages, tax liens, precious metals, private placements, and LLCs. If you have extensive knowledge and expertise in any of these areas, then you can enjoy the returns of these beneficial investments with checkbook control IRA.

How the checkbook control IRA LLC process works

  1. You need to set up a self-directed IRA account. The account should be IRS-approved and you also need to appoint a passive custodian for the account.

  2. Next, you need to transfer your retirement reserve to your newly created self-directed IRA.

  3. Form an LLC while ensuring the account holder is nominated as the manager and the IRA is designated as the member of the LLC.

  4. Based on the directions of the IRA owner, the custodian will invest the funds of the IRA into the LLC.

  5. IRA LLC’s owner will be responsible for directing the funds in a self-directed IRA into other investments.

  6. The income and capital gains made from every investment will start flowing tax-deferred to your IRA LLC!

So, open a checkbook IRA LLC today and take control of your investment portfolio.

checkbook IRA

To enjoy checkbook control, you must first establish a limited liability company. (Source)

How to set up a checkbook IRA

Checkbook control IRA is popularly known as a self-directed IRA LLC because to enjoy checkbook control, you must first establish a limited liability company. This LLC must be owned and operated by the IRA. Since you would be managing the checkbook control IRA, you will exercise complete authority over writing checks for your investments.

The do’s and don’ts of checkbook control IRA LLC

If you want to maximize the returns of your checkbook control IRA LLC, make sure you know these rules.

Do’s Don’ts
Create IRA and then establish  Limited Liability Company Don’t title checkbook IRA investments in your personal name
Use the LLC’s EIN (employer identification number ) when you are opening the account Don’t use personal funds for paying investment expenses that are associated with IRA assets
Deposit all the gains into the checkbook control IRA LLC account Don’t use the checkbook IRA assets and funds for personal needs or for personal property
Make annual contributions to the self-directed IRA first and not to your checkbook control IRA Do not transfer any personal funds into your checkbook control IRA

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday, and NuWireInvestor. If you need help and guidance with traditional or alternative investments, get in touch with Rick.