Self Directed IRA transfer from LLC "Checkbook" account

[Jason Powell]

Here is the scenario. Cash in a bank checking account under an LLC that's owned by a self directed IRA through Entrust. I'm wanting to transfer some cash to another IRA at another SDIRA custodian for some different investments through a firm that uses a different provider. How do I transfer cash to that new IRA?

Preferred option - I sent a wire directly from the LLC checking account to the new IRA custodian (Kingdom Trust for what it's worth). Do you see any issues with doing that? I know the IRA transfer process normally entails transfer paperwork on the receiving custodian forms that are sent to the releasing custodian back office, but I'm confused in this case since the cash is actually at a bank checking account.

[Brian Eastman]

@Jason Powell

!!! STOP !!!

That is the number one mistake people make with a checkbook IRA. The LLC is not the IRA, it is the investment of the IRA. If you do as you propose you will break the reporting chain of that money and create potential tax penalties.

To accomplish what you seek, you must liquidate cash from the LLC back to the IRA at Entrust that owns the LLC. You could then have Kingdom request a trustee-to-trustee transfer from Entrust.

But, none of that is necessary. Your IRA owned LLC can make the investment and there is no need to have Kingdom involved at all.

You should definitely have a conversation with your LLC provider and get a better handle on what you have and how it works.