Self Directed IRA LLC's

[Joel James]

I am looking at self directed IRA's using LLC's. From what I have read, this give the investor total control because the funds are at a local bank with check book control. This sounds great because it lowers the transaction fees and also gives you some legal protection. You still need a custodian, but they are removed from the day to day monitoring and approval process. It sound like a great option but seems too good to be true. Has anyone ever used this self directed method and, if so, can you recommend a custodial company? I am new to this so any advice would be great. It does sound like one should have an attorney generate and file the appropriate paperwork to insure that is done correctly.

Thanks;

Joel

[Daniel Dietz]

Joel,

Im sure you will get a lot of other replies too, but here is my opinion.

I did a LOT of reading both here and elsewhere on SDIRAs and LLCs. This IS the method we use. We do have 'local checkbook control' which is GREAT as we have rentals, so lots of little misc. bills etc... 'We' consists of my brother and father, all using our SDIRAs in a 3 way partnership (33.333% each) that is formed as an LLC with each of our SDIRAs (NOT us as individuals) each owning a third of the LLC. Hope that makes sense.

You will see a lot of reading that we are 'disallowed parties' to each other in regards to SDIRAs. This IS true in MOST situations. This is basically to avoid people from abusing the rules and trying to pass assets from one person to another. We were VERY careful to set this up right from the beginning. The point to take away is this; We started this LLC as 'one third owners each' and that can NEVER CHANGE. All income and outgo must be done in these EXACT proportions, for eternity essentially.

My understanding is that an LLC would work the same for a Single Member LLC as far as the checkbook control goes, but I'll let others chime in on that.

We used UDirect IRA Services who were recommend on here by someone and they were/are very good. They in turn recommend Mark Kholer Law Offices (not sure on spelling right off, but google them and you'll find them. They were also very good, and not too badly priced, if I remember about $1500 for the 3 way LLC which is much more than a single member one.

Make sure to read up on 'prohibited transactions' before you start. 

You will also here about Solo 401Ks, which are essentially like a SDIRA, but less rules. You do need to have self employment income though to do them. A good way to go IF it works for you.

Dan Dietz