SDIRA checkbook status and credit card

[James Sullivan]

I have recently went through the process of setting up my SDIRA with checkbook status. The bank that is housing the LLC insisted that I have a credit card. Is it a prohibited transaction to use the LLC credit card to pay contractors to do work on the property or as a down payment to purchase a property?

[Jon Holdman]

I was advised by an attorney that you MUST not get a credit card for the bank account for an IRA LLC. The bank will almost certainly want a personal guarantee (that is, your SSN and your signature as you rather than as the manager of the LLC.) That's prohibited whether you ever use the card or not.

I was also advised a debit card would be OK.

I think you're playing with fire, @Daniel Dietz You're mixing your personal finances with your IRA-LLC, even if you pay the bills separately. You should get a separate account for the IRA-LLC and never, ever mix IRA-LLC money and personal money. Given you've done this, you will need to have very detailed records to survive an audit and prove you're not done any prohibited transactions. Such as the having the IRA-LLC buy a can of paint that you subsequently used for a personally owned property. It only takes one prohibited transaction to result in the entire IRA being considered to be distributed. Which triggers taxes and penalties on the entire balance.