Achieve Checkbook Control with a Self-Directed Solo K without an LLC

The self-directed IRA and 401k has become a very popular investment vehicle for achieving financial independence and growing their retirement account nest egg for many retirement account holders. There are countless investment options available to those seeking investment beyond your traditional Wall Street investment whereas you are in control and can make the investment choices and decisions. In order to add to the control and flexibility of making such investments via a self-directed retirement plan is through the use of an LLC. However, depending on which state in which you reside, an LLC make not be a cost effective tool for achieving the highly sought out Check Book Control. Therefore, many whom qualify for a self-directed Solo K are realizing they can achieve this additional feature without having to establish an LLC. The cost to establish a compliant IRA/401K Owned LLC ranges from $1000 - $2000 plus the annual cost to maintain the LLC through the state in which the LLC is domiciled. In the state of California the annual cost to maintain the LLC is $800+ per year.

Here is how the CheckBook Control option is achieved without an LLC. You become the plan administrator of your plan and you can choose to set up an account via a self-directed custodian or you may opt to choose a bank whom will establish a custodian account with an actual checkbook thus allowing you to conduct transactions as the plan administrator for the plan. This includes to acquire and sell assets on the behalf of the plan as well pay expenses associated with the assets owned by the plan. The Checkbook option is not for everyone considering not everyone when first establishing the plan are familiar with all the rules that must be followed relating to IRC 4975 (Prohibited Transactions and Disqualified Persons). It’s highly recommended that the accountholder have a relationship with a knowledgeable CPA, Enrolled Agent and/or attorney to consult with form time to time on inquiries relative to adhering to the rules relative to specific transactions and transaction structures. If you understand IRC 4975 rules and maintain proper accounting of the account you should not have a problem with this structure.

The Solo K is designed or the small business whereas there are general partners with no employees, sole proprietor with no employees, which includes a husband and wife owned business. In addition, if you are self-employed and/or your income is derived from 1099 income, you are eligible for this plan. What’s nice about this plan is it has many features an IRA does not offer such as:

• Annual Contribution limit up to $59,000
• Roth Option
• Grow the plan tax deferred or tax free
• The ability to borrow up to $50,000 from the plan
• Exempt from UDFI (Unrelated Debt Finance Income Tax) if non-recourse financing is being used for the acquisition of an asset such as real estate
• Checkbook Control without an LLC
• The ability to invest in both traditional and alternative investments