Moving money from LLC bank account to personal Roth IRA

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Moving money from LLC bank account to personal Roth IRA

Catherine C.
NY · Member since 2019 · 41 posts · 3 votes

Hi All. What is the best way to do this? There is money in our business LLC bank account, however we'd like to transfer $6000 (the annual max) to a personal Roth IRA. Any tips appreciated, thanks!

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
5y
Originally posted by @Catherine C.:

Hi All. What is the best way to do this? There is money in our business LLC bank account, however we'd like to transfer $6000 (the annual max) to a personal Roth IRA. Any tips appreciated, thanks!

Yes transfer it and book the transaction as distribution on your LLC's book.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    5y
    Originally posted by @Catherine C.:

    Hi All. What is the best way to do this? There is money in our business LLC bank account, however we'd like to transfer $6000 (the annual max) to a personal Roth IRA. Any tips appreciated, thanks!

    Yes transfer it and book the transaction as distribution on your LLC's book.

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®4.9242 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    1Reply
  • Catherine C.
    OP
    NY · Member since 2019 · 41 posts · 3 votes
    5y
    Originally posted by @Ashish Acharya:
    Originally posted by @Catherine C.:

    Hi All. What is the best way to do this? There is money in our business LLC bank account, however we'd like to transfer $6000 (the annual max) to a personal Roth IRA. Any tips appreciated, thanks!

    Yes transfer it and book the transaction as distribution on your LLC's book.

    Thank you, is it best to first transfer the $6000 from the LLC to a personal bank account and THEN to a Roth IRA? Is there any difference regarding taxes owed? I know Roth IRAs are post tax. Thanks

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    5y
    Originally posted by @Catherine C.:
    Originally posted by @Ashish Acharya:
    Originally posted by @Catherine C.:

    Hi All. What is the best way to do this? There is money in our business LLC bank account, however we'd like to transfer $6000 (the annual max) to a personal Roth IRA. Any tips appreciated, thanks!

    Yes transfer it and book the transaction as distribution on your LLC's book.

    Thank you, is it best to first transfer the $6000 from the LLC to a personal bank account and THEN to a Roth IRA? Is there any difference regarding taxes owed? I know Roth IRAs are post tax. Thanks

    There is no tax impact either way. 

    Just book it correctly as distribution.  

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®4.9242 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
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  • Mark Edler
    Accountant · Philadelphia, PA · Member since 2020 · 23 posts · 20 votes
    5y

    @Catherine C. Agree with there is no tax impact because the Roth IRA contribution is after-tax. If it were a traditional IRA, There would be no impact on the accounting for the Business Account but your 1040 would show a $6,000 adjustment to income. Feel free to reach out with any other questions!

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  • Catherine C.
    OP
    NY · Member since 2019 · 41 posts · 3 votes
    5y

    Great, thank you both so much! I appreciate the help

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5y

    @Catherine C.

    One thing to be mindful of is that you may potentially not be eligible to contribute directly into a Roth IRA. This is dependent on your income.

    There are ways potentially to indirectly make a Roth contribution via backdoor.

    [email protected]917-280-8544
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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    5y

    @Catherine C.

    From my relatively layman's point of view, I would definitely transfer the funds from the LLC bank account to a personal account. With electronic transfers its either immediate or overnight. And it more cleanly protects your corporate veil. As long as the rest of your financial situation allows you to contribute, otherwise you'll have to backdoor it through an IRA.

    Good luck.

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