LLC within my IRA

[Brian Winkler]

Hello everyone. After years of stalling, I've recently taken the plunge.. Appreciative of all the advice and information the BP community provides and suspect I will be spending my nights reading as much as I can.

I decided to start small, rehabbing small single-family houses with IRA funding. I have moved from my traditional IRA to a custodial IRA and struggled through the paperwork on my first purchase. Looking back, it wasn't too cumbersome but the company was very particular on how the documents and requests were filled out. Resubmitting my way through the process, I'm sure I will get it right the second time.

I'm torn with the idea of setting up an LLC within the IRA. I understand the benefit of "check book control" but am a bit intimidated by the need for an operating document and the risk that an audit would determine a payment disallowed and my IRA standing suffer.

I've bumped up my Personal Umbrella policy to a 2x multiple of my net worth and like the comfort that I have a custodian monitoring the transactions.

Most of what I've read speak to the business benefits of the LLC, where you earn, spend, then tax vs. traditional earn, tax, spend and I certainly appreciate how the LLC would be beneficial outside of the IRA.

I am sure I'm missing something... Should I reconsider the IRA-LLC?

Help appreciated,

Brian Winkler

[Jon Holdman]

The reason you might do an IRA LLC vs. a flexible custodian for a true SDIRA would be speed and ease of making investments. I did set up an IRA LLC when I was making direct loans within my LLC to rehabbers. Getting through the process with a custodian (Sterling Trust, in my case) was slow and painful. The IRA LLC made it quicker to get the money to the title company. I've since moved away from that approach and invest them money with a broker in a pool The IRA LLC isn't nearly as necessary.

If you go the IRA-LLC route, set it up with a reputable company. I used Guidant for mine. I just received and e-mail that this business has been purchased by a law firm called iDirect. We will see how that goes.