You may have heard about an IRA LLC or self directed IRA and are wondering what they are and what purposes they are used for. For many, it seems like a wonderful idea to be able to use your own IRA or 401(k) funds to invest at your own discretion. Many investors believe they can beat the stock market with other investments or they desire more direct control over their retirement accounts. If you fall into that category, then a self directed IRA LLC may be a good option for you.
A self directed IRA LLC is a great investment vehicle, especially for those wanting more direct control of their assets and what they are invested in. An Arizona IRA LLC allows you to form an LLC with your IRA or 401k as a member, and you as the manager with checkbook control, can invest the funds (there are certain IRS limitations and prohibited transactions) into investments of your choice. Most of our clients who choose this type of setup invest in real estate, but there are many other legitimate investments as well.
In this post I will give you a basic overview of setting up an Arizona Self Directed IRA LLC. Information in this post is strictly informational opinion and should not be misconstrued as legal or tax advice. Forming an IRA LLC can be a complicated and daunting process to do on your own. Certain IRS guidelines and rules must be followed while setting up an IRA LLC in order to avoid some serious tax implications and penalties for prohibited transactions. Spartan Solutions has successfully formed many IRA LLC's in Arizona and would love the opportunity to assist with forming yours.
One of the first things you should do is speak to an accountant or tax attorney to determine if this is the right type of investment for you. If you decide an IRA LLC is right for you, you can begin the process by transferring your IRA funds to a custodian that allows for self directed investing. Once your funds are with the new custodian you can contact us to begin drafting your IRA LLC formation documents. When you contact us, we will have have you complete our questionnaire, and give you an invoice for our services. The fee for our services is paid directly by your IRA custodian with funds from your IRA account. Do not pay for LLC services out of your own pocket or you risk a prohibited transaction. To pay our invoice you will need to fill out the custodian's disbursement request form and include a copy of our invoice for IRA LLC formation services. The custodian will then mail us a check directly from your IRA account. When we receive payment from the IRA custodian we will draft your paperwork and submit it to you for review. We then submit your IRA LLC documents to the Arizona Corporation Commission for approval. Once your IRA LLC is approved by the A.C.C. your new company is formed and you can obtain a Federal EIN or Tax ID number which you will need to open a bank account for the LLC. After the A.C.C. approves your IRA LLC Articles of Organization we will then have the proper documents published to meet the Arizona publishing requirements. Once the IRA LLC is formed, you direct your IRA custodian to invest some or all of the funds into the new LLC. The custodian then writes a check or wires funds to the new LLC and those funds are deposited in the LLC's bank account. You are the manager of the IRA LLC so you are the person in control of the LLC. You are the person listed as manager of the IRA LLC on the bank account, therefore you have "checkbook control" to write checks for the LLC's investments. You have to be extremely careful with prohibited transactions because they can trigger enormous tax consequences and penalties. You are essentially responsible for managing a business, but have the added responsibility to follow all IRS rules for prohibited transactions. We recommend consulting with your accountant prior to each and any transaction you make to be 100% certain of your tax implications.
If you would like to set up an Arizona self directed IRA LLC please contact us. Spartan Solutions has formed many self directed IRA LLC's in Arizona and we would love the opportunity to form yours. Our IRA LLC document preparation service includes drafting the required documents and publishing notices, the expedited filing fees for the Arizona Corporation Commission, and the publishing fees for publishing requirements in Arizona.