Set up my own LLC for checkbook SDIRA or hire someone else?

[Paul Winka]

I've set up my own LLC before in Missouri. It takes less than 30 minutes and costs around $55. I once paid a princely amount to attorney to do that for me and it took 3 weeks. I learned my lesson. So...

But what about setting up an LLC with checkbook control to use with a SD-IRA? Is this something I can handle myself with a few templates or should I should I hire a specialist, and how much could I expect to pay them? My local attorney wasn't able to assist.

And between checkbook controlled SD-IRA and a SD solo 401K, the latter is recommended by several here on BP. Can I convert the IRA to a 401K?

[Brian Eastman]

@Paul Winka

The LLC for a checkbook IRA is specialized in nature with respect to several components of how it is formed and ultimately integrated with the IRA account at the custodian that will hold the LLC.

While it is critically important that the LLC be formed properly, it is even more important that it be used properly. Having experts in this space on your team who can guide you as to the IRS rules as you invest with and operate an IRA owned LLC is vital. It is easy with such guidance to avoid risk with the IRS. Without such guidance, you are putting the entirety of your IRA at exposure to distribution and significant taxes if you make a mistake.

We regularly get calls from folks who are half-way through trying to cobble together their own LLC. 99% of the time they are early in the process and have already done something that would violate IRS rules. They have wasted time and money and need to start over with a professional or abandon the concept entirely.

When you work with a professional firm that specializes in this area, you will generally get the plan setup as well as guidance bundled in with the service, which is why most providers charge more than the $51.25 fee involved with the state filing component you mention.

If you were to have success establishing the structure and getting a custodian to accept your LLC documents, you would then need to find a knowledgeable attorney in this space and pay on the order of $400/hour for any questions you may have about IRS rules in the future.