Questions: Self Direct IRA’s; I’ve read a lot of the posts already.

[Frank Fiore Jr]

Looking for feedback positive or negative, and a slap in the face if necessary…

For clarification: when I refer to SDIRA I am talking about having the ability to invest in Notes, Real Estate etc… at my direction….

High Level Overview:

Long term goal:

Buy Notes and Rental property; with my SDIRA, and the kids down the street have a rather lucrative lemonade stand I may take them national… J

Funding / Structure:

Funding is going to be difficult; I have no existing IRA; and my only 401k is active and doesn't allow active rollovers. I anticipate opening a ROTH IRA and fund the maximum allowed under the law for as many years as I can and or need. If I leave my current job I'll rollover a portion of my 401k.

Structurally; I would like to create an IRA owned LLC; and partner with myself; so I have passive income flowing into my retirement account; and also flowing to myself directly. It is my understanding this is possible.

I am 85.7% sure I want to set up my SDIRA with uDirect; based on the BiggerPockets threads, and a cursory level review of a few custodians.

Timeline:

Without having the ability to rollover funds from my existing 401k this will take some time to fund on the SDIRA side.

Questions / Misunderstandings

1. Can you open a SDIRA from scratch or do need an existing IRA to roll over?

a. Am I better off going with a managed ROTH IRA until I accumulate the monies I need to venture into Notes, RE, and then roll it over to a SD IRA (uDirect)?

2 Can you create an IRA LLC at any time? Or does it have to be created at the same time you open the SDIRA?

a. Can you allocate a % of the monies in a SDIRA to the LLC? I am wondering about asset protection here; if for some reason my LLC is getting into legal trouble are all the assets in my SDIRA at risk? How do I protect my other, non LLC investments?

3. How important is it to be close to your custodian; uDirect is in California, and I am on the East Coast?

[Ellis San Jose]

@Frank Fiore Jr

I'm not an expert but hopefully this may help. I did something similar. I opened an IRA account (you can do it directly with a self directed custodian or open one up at a local bank or brokerage then transfer).

Are you better off with starting off managed or building your balance & then transferring? You do have to consider the higher fees associated with a self directed account. They can eat up a huge % of a low balance account. Unless you have the knowledge or ability to acquire smaller notes or partials, it may be difficult for you to justify the additional expense.

You can open up a SDIRA first without an LLC. You would just administer it more traditionally through your custodian as the conduit, with letters of direction etc. for each transaction.

I am not qualified to answer your question about liability of assets, that is best answered by a legal pro. What I can tell you is that my mentors recommended to me not to own real estate in my IRA's because of higher potential liability, That's why I only look at notes & options for those accounts. Also, partnering with your IRA although it is allowed, I have spoken to a few custodians & they discourage it because it can open up more scrutiny on your transaction, so please get a professional evaluation & opinion

As far as where your custodian is, I don't think having a custodian in another state is a deal killer. I suppose there could be an advantage to be able to walk into an office if you were extremely active or had critical time constraints to close a transaction. I do like Kaaren Hall & uDirect because they have a great commitment to education & outreach to the investor community.