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Updated about 8 years ago on . Most recent reply presented by

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Patrick Plummer
  • Investor
  • Mechanicsburg, PA
2
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9
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Can a Self-Directed IRA LLC be created in a Series LLC Cell?

Patrick Plummer
  • Investor
  • Mechanicsburg, PA
Posted

Hi. This is my first post here on BiggerPockets and I hope someone can shed some light on a question of mine.

I am going to create a self-directed IRA (SDIRA) LLC (aka a checkbook IRA), and I have spoken with several firms in that area, e.g., uDirect, IRA Financial Group. I can't get an answer to this question: rather than paying their charge of $1,400-2,200 to create a Traditional IRA LLC plus another $1,400-2,200 to create a Roth IRA LLC, I want to create two new cell/series in a Texas Series LLC to save myself the bulk of the setup and ongoing LLC costs.

Can anyone confirm this is ok? How do I go about doing so? Are there any issues associated with using series LLC cell for this purpose that would be unique to an IRA LLC?

Thanks! P.

Most Popular Reply

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Brian Eastman
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
2,536
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2,878
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Brian Eastman
  • Self Directed IRA & 401k Advisor
  • Wenatchee, WA
Replied

@Doreen Chaisson

I'm sorry, but that is simply not good advice.  I hate to call another poster out, but felt I really had to here.

A partnership LLC comes with all kinds of restrictions including prohibitions on future funding and the necessity for partnership tax returns. This is something that a tax attorney who specializes in ERISA law and has specific knowledge of self directed IRA LLC structures will be aware of and able to advise a client on. A typical corporate or real estate attorney will not have that kind of knowledge and could lead a client into potential trouble.

@Patrick Plummer is not, of course, required to work with one of the specialty firms that offer checkbook IRA plans, and could work with an independent tax attorney familiar with these concepts. Often times that can end up being more expensive, however, based on the hourly rate of the attorney and how much assistance the client may require.

As to Mr. Plumber's question about a series LLC, I'm going to punt on that one. Our tax attorney is not a fan of the series LLC since it is a concept that has yet to be fully tested in the courts. It seems good in theory, but will it really stand? As such, this is not an area we have delved into at the level of detail required to answer the question at hand.

I would add that a Texas series LLC would only be beneficial if the investments were to take place in Texas. I noticed Mr. Plumber is in Pennsylvania and would not recommend a Texas LLC for real estate investments in Pennsylvania.

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