Custodian recommendation for Roth Ira investing in LLC

[Gabriel C.]

In Podcast #211, Bob mentioned using his Roth to invest in his LLC. I've heard of doing this with a self-directed brokerage for a 401k/IRA and now I'm more curious about pursuing this because of money in a Roth. I'm curious if anyone recommends a custodian other than that Bob mentioned (Sun West Trust in NM) for accomplishing this.

Here is more information on the topic for those interested: https://www.biggerpockets.com/renewsblog/invest-real-estate-self-directed-IRA/

[Brian Eastman]

@Gabriel C.

The IRA is not investing in your LLC. The LLC is wholly owned by the IRA. This mechanism is referred to as a Checkbook IRA LLC and has been around since the early 1990's. It is a great way to take full control over IRA money and invest in alternative assets such as real estate, private notes, cryptocurrency, etc. it is very similar to the Solo 401(k) in functionality, just based on an IRA format. If you have an existing Roth IRA, this is the way to go.

With this structure, the best place to start your vendor research is with the specialty firms offering the LLC program. They are providing the real service and consulting layer, and will use one or more custodian's for the back end role of simply holding the IRA and documenting the IRA's ownership in the LLC entity. Several providers are active here on BP and can help you gain the knowledge you need to determine if this is the right strategy for you.