https://SelfDirected.org/2 The Checkbook IRA LLC Provides the Highest Level of Control Available Over a Self-Directed IRA... and Substantially Increases the Risk of Prohibited Transactions.
- Checkbook IRA LLC provides two huge benefits: Ultimate control (and instant access to capital) for the self-directed IRA account holder, and potentially lower transaction fees.
- This strategy works by using the capital held by a fully self-directed IRA custodian to purchase 100% of the shares of an LLC, which is managed and controlled by the IRA owner.
- But the freedom to control the capital does not minimize the need for the account to avoid prohibited transactions. In fact, the Checkbook IRA LLC strategy increases the risk of committing a prohibited transaction in your IRA.
- After a rule change in 2014, your custodian notifies the IRS when you use this strategy, or invest in any type of "illiquid asset".
- Cost of committing a prohibited transaction in your IRA is very frequently 50% of the IRA balance or more, with a cost running to 100% not unusual.
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