All Forum Posts by: Brett Synicky

@Terra Padgett

You actually don't need an LLC for either one. You can have a self directed IRA that requires you to go through the custodian for all transactions, custodian is on title FBO the IRA, and the custodian has to sign everything. This setup is not ideal for investing that can be transaction heavy, due to red tape, delays, and transaction fees or higher flat annual.

Enter the checkbook IRA, where usually a special purpose LLC is created that allows the IRA owner to bypass the custodian for all transactions and investments making it a much more efficient way to invest. A special purpose trust can also be used.

A Solo 401k does not require a custodian and since it's a trust the Solo 401k owner can be the trustee which gives them the same checkbook control that comes with the IRA LLC/Trust. An LLC can be created to hold the assets of the Solo 401k if there's a reason for it but it's not necessary.

@Brandon O.

Lots of people on this forum have used a checkbook IRA and/or Solo 401k for investing in non-wall street assets. There are lots of threads about this if you search. Learn more about both here:

https://www.biggerpockets.com/member-blogs/2810/blog_posts/2...

https://www.biggerpockets.com/member-blogs/2810/21298-solo-4...

What are you comfortable with? In other words, what type of investing do you have experience in? Real Estate buy and hold, Crypto, Private Lending, Industrial Syndication? I recommend you start with what you know, at least with the bulk of your IRA. Then use a small chunk as "learning money" so if you don't lose it all, it won't be detrimental. Either way, you're the fiduciary of your plan so it's important to make smart educated investments. Feel free to dm me if you want to have a further discussion.

There are no taxes on the sale of real estate in an IRA so there's no application for a 1031. You simply sell the real estate and do something else with the cash.

@Stacey Arbetter

The brokerage tasty trade has allowed IRA owned LLC's to open accounts.

Worst case just transfer some of the money from the checkbook IRA to a brokerage like Vanguard Fidelity and have two separate IRAs.

 As @Michael Plaks recommended there are lots of threads on BP discussing this. Depending on what your investing goals are you want to looking into self directed IRA vs. checkbook IRA or even better if you qualify Solo 401k. The pitfalls really revolve around prohibited transactions and disqualified parties. Stay arms length and nothing to worry about. 

There are a couple of types of SDIRAs. SDIRAs where you go through the custodian for all transactions and they're on title to all assets FBO your IRA. Depending on the fee schedule and activity this can cost significant transaction fees and always includes some red tape and extra processes to go through. If you're only doing a couple or so transactions per year probably ok.

On the other hand, you can have more control and eliminate the need to go through a custodian for investments by the use of checkbook IRA or Solo 401k. If you get a loan it must be non-recourse and will require about 30-50% down. See list of lenders here. If you have an IRA LLC the custodian is not involved in the IRA obtaining financing including a refi. You're the manager of the LLC of which the IRA is the only member so you control that.

Whether you have checkbook control or not, the rollover will go from custodian to custodian so you'll work with both to process the rollover. As the manager of the LLC, you can open a checking account where the funds rolled from your 401k. will land. The checking account can act as the home for the funds until you deploy the money into and investment, then all expenses and returns flow from and into that checking account that you control.

It may sound complicated but it's really not once it's all set up. Hope this helps.

There may be a better way to get more in Roth. You can make straight Roth contributions or convert cash as you’re talking about but you can also convert assets from pre-tax to Roth. If you have a self directed account and invest pre-tax money into illiquid assets like syndication or mortgage notes they will come in at a value of less than the principal. Sometimes significantly less. Like 60%. So more Roth for way less in taxable income incurred. 
doing this is easiest in a Solo 401k if you qualify but can also be done using a checkbook IRA as well. 

check out this post that @Dmitriy Fomichenko made explaining this concept.

https://www.biggerpockets.com/forums/51/topics/1223601-how-t...

@Todd Knudson is there a loan on the property? That is the only way you can deduct some expenses and use depreciation within the IRA. None of this has anything to do with your personal tax return. Work with a qualified tax advisor on filing all of this including filing the 990T return for the IRA. If the IRA owns the property outright that is all moot. Yes all losses and returns the IRA incurs stay in the IRA until you take a distribution.

So you rolled the property from one retirement account into another, right? It's unclear on how that plays into your question about taxes. Are we missing something? What @Dmitriy Fomichenko and @Matt Devincenzo said are correct.