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Updated about 7 years ago,

User Stats

38
Posts
25
Votes
Ron Read
  • Las Vegas, NV
25
Votes |
38
Posts

Checkbook IRA for first Buy and Hold?

Ron Read
  • Las Vegas, NV
Posted

So after probably too much research, I'm looking to take a leap into some buy and hold or perhaps BRRR investing, but I'm short on savings, while long on IRA assets. Rather than wait any longer, I've decided to use my retirement savings to cut my teeth. (Thanks to the BP Podcasts for making me aware I could even do this).

I'm currently looking to move my Roth IRA account from a traditional discount stock brokerage to an SDIRA, and am most intrigued specifically by the notion of a Checkbook IRA (IRA LLC), since even though the initial fees are high, the ongoing/annual fees appear as though they are not.  My overall question to anyone who has done this, is what kind of tax and paperwork nightmare am I in for?

Based on my research, here are my assumptions about the Checkbook IRA (please let me know if I got any of this wrong):

  • I'll need to set up an LLC in my state, and the IRA will be responsible for paying the filing and annual franchise fees
  • I'll want to structure the LLC as single-member LLC, so I can pass-through any passive income to the IRA directly
  • If I borrow money within the LLC, or start flipping homes, some income will be taxable, but I'll be able to use deductions just like a normal LLC or individual filer
  • I'll need to put the LLC into a Roth IRA so I can direct-transfer cash from old brokerage in-kind
  • Once I have the LLC created, I'll need to open a bank-account in the name of the LLC
  • I'll need to keep immaculate books

Here are my questions:

  1. Do I need to use the services of an SDIRA firm to set up my LLC? It seems pretty easy, and I don't want to throw money away.
  2. Do I actually need a custodian to adopt the LLC into the IRA, or is this another form I could potentially complete and file on my own behalf, since I will be my own de-facto custodian?
  3. How do I convince my existing discount brokerage that a check or wire issued to my LLC is not a distribution, but in fact a transfer? The registration on the account will be completely different? (Or is this where I need an SDIRA firm?)
  4. How hard will it be to find an accountant who understands this, and won't learn about it as he goes on my dime?  

(If anyone invests using a Checkbook IRA in South Carolina, I'd love the name of your accountant, and/or a guesstimate of what I'll pay them.)

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