An IRA LLC, or Individual Retirement Account Limited Liability Company, has a lot of benefits compared to hiring a custodian to handle your investments. The IRA LLC gives you complete control over your self-directed IRA investments, opening up a wide range of options, including that of non recourse loans to invest in real estate. The self directed IRA owns shares of LLC and you can route all your transactions through the LLC, rather than through the IRA. This puts check book control in your hands allowing you to have quicker response time to make an investment compared to a custodian.
There are significant benefits of an IRA LLC. They are:
With an IRA LLC, you can invest in real estate via non recourse loans. If you invest through a custodian chances are it will be more cumbersome to make non-traditional investments. This makes an IRA LLC the obvious choice to diversify and enjoy profit from carefully selected investments when you retire.
After you acquire your property through non recourse financing, and decide to sell it for a profit, you do it through your LLC. The profit thus gained is tax deferred through the IRA. You do not need to go through 1031 exchanges because your IRA is a qualified deferred tax account.
When you own the IRA LLC, you are the manager of your funds with check book control. You do not have to go through the hassles of dealing with a custodian who may object to your investment choices.
An IRA LLC can use its own funds or funds from non recourse loans to make a purchase on a real estate investment. The LLC can also borrow the balance although it cannot personally guarantee the financing obtained.
As manager of the LLC, you can save a significant amount of money in custodian's fees, as you typically only pay a small annual fee to the custodian.
There are major tax advantages with a self directed IRA LLC, just like with the traditional IRA, but with the added benefit of tax deferred income and tax free gains. This is because the income you earn from your IRA goes into your IRA and is tax-free, letting you make gains without paying taxes along the way. The tax implications come only at the time of distribution.
An IRA LLC gives you the freedom in invest in real estate, private businesses, precious metals, promissory notes, tax liens or just about anything that is not on the list of prohibited transactions. The income is tax-free for a Roth IRA and tax deferred for a traditional IRA. There is also the advantage of diversification, allowing you to build a strong portfolio that gives you the maximum returns while minimizing risk. Even if your IRA does not have sufficient funds, you can opt for IRA lending through non recourse loans to facilitate the real estate purchase.
When you open a self directed IRA LLC, you have direct access to the funds in your IRA so that when you come across a lucrative investment, you can act without needing the approval of your custodian. You also save on custodian transaction and account review fees. You never have to worry about a lost opportunity which could occur while waiting the custodian's opinion and process of the investment request. With an IRA LLC it's as easy as writing the check from your checkbook.
Since your self directed IRA LLC is allowed to borrow funds through a non recourse loan, this also ensures that any other IRA assets are protected from any liability. Having an IRA LLC puts complete flexibility in your hands and checkbook control.
Josh Manier's Profile