How to Establish a Self-Directed IRA LLC
- 1). Draw up an operating agreement or document for a limited liability corporation. This operating agreement spells out the purpose of the limited liability corporation and which parties are responsible for what. This document may require technical legal advice, which varies according to your state jurisdiction. Consult a qualified attorney experienced in setting up self-directed IRAs prior to drafting the agreement.
- 2). File articles of organization with the office of the secretary of state in the state in which you reside or where you plan to locate your business. This is typically a brief document that establishes your LLC as a separate entity in your state and formally notifies the state of who is responsible for the actions of the LLC.
- 3). Name yourself as the manager of the LLC. This allows you to make all decisions within the LLC and ultimately enables you to manage your IRA assets as you see fit, subject to the limitations already outlined.
- 4). Open a business checking account in the business's name. You will use this checking account to manage the affairs within your self-directed IRA. It is important to maintain a strict segregation between the IRA's assets and your own personal assets. If you do not do so, the IRS can disallow the entire IRA, resulting in a taxable distribution of the whole amount, plus a possible 10 percent penalty if you are under age 59 and a half.
- 5). Name your new IRA custodian. Transfer your existing IRA to the new custodian and then direct them to deposit the funds in your LLC's business checking account. Use the proceeds to purchase the assets you want your IRA to own.
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