Anyone with a Checkbook Trust SDIRA in California?

Question

Does anyone recommendation a custodian who set theirs up for them?

(Using a Trust, instead of an LLC, is recommended by many to avoid the mandatory $800 annual California FTB fee charged on LLCs)

Joe Homs · Answer

@Jake Cyeed I have had a checkbook 401K for nearly 10 years now.  Reach out to @Dmitriy Fomichenko who is the best in the business.

Good Investing...

Jake Cyeed · Answer

@Brian Eastman thank you for the info.   Starting a solo 401k is not on my radar at this time.

My intentions are to invest the SDIRA only in larger limited partnerships.  The checkbook control is mainly for convenience, and also to be open to other non-liability assets down the road.

Would you care to mention which of the specialized firms you think are worth looking at?

Brian Eastman · Answer

@Jake Cyeed

A Solo 401(k) such as @Joe Homs has is a different form of retirement plan, designed for people who are self-employed and have no full-time employees in any business they control.   The plan itself is a trust and there is no requirement for a 3rd party custodian as there is with an IRA.   If you qualify, it is a nice option.

In the IRA format, you need to start with an IRA held by a non-traditional custodian, then have the IRA make a single investment into either an LLC or Trust to obtain checkbook control over the IRA.

There are a few firms that specialize in establishing a checkbook IRA trust.

If you are investing in non-liability risk assets like funds and syndications, there is a clear advantage to the trust as it is not considered a business and therefore not under the purview of the CA Franchise Tax Board.

If you will be investing in rental property, the limited liability protections offered by a LLC may outweigh the cost and headache of California filings.  With the trust, the protections will not be as robust.  Of course, quality landlord insurance is a useful risk mitigation strategy.

Which is best for you will depend on the nature and scale of investments you intend to make, as well as your risk tolerance.

Bottom line is to speak not only with a plan provider, but also with qualified tax or legal counsel.

Joe Homs · Answer

@Jake Cyeed it uses a trust.

Jake Cyeed · Answer

@Joe Homs thank you for the recommendation.  Does your 401k use an LLC or a trust?

Anyone with a Checkbook Trust SDIRA in California?

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