Self-Directed IRAs that incorporate this LLC strategy are often referred to as "Checkbook IRAs" because the structure provides investors with significantly more control and flexibility over the investment activities within their Self-Directed IRA.
The Self-Directed IRA arranges to have a Limited Liability Company ("LLC") set-up and owned inside of the SDIRA. The LLC is managed by a Manager appointed by the SDIRA. The Manager then opens a bank account in the name of the LLC. The SDIRA then "capitalizes" or "funds" the LLC by contributing cash held inside of the IRA into the LLC's bank account as the LLC's initial equity/members' capital.
The Manager has complete control and flexibility over making investments inside of the LLC. The Manager can easily make investments on behalf of and inside the LLC. The Manager can respond to investment opportunities quickly by writing checks from the LLC's checking account in order to close on the investment opportunity.
It is therefore extremely important to choose the Manager of the LLC carefully.
Prohibited Transactions, Self-Dealing and Related Party Issues
There continues to be significant concern regarding potential problems with the Checkbook IRA structure, including possible prohibited transaction, self-dealing and related party issues. These concerns are especially worrisome when investors or investor's family members serve as the LLC's Manager.
Investors often look for third-party service providers to serve as an independent Manager of the LLC set-up by and held inside their Self-Directed IRA. Independent LLC Managers that are experts in Self-Directed IRAs and in the administration of Alternative Investments such as real estate, deeds of trust, mortgages, tax lien certificates, and more, can eliminate the Investor's concerns regarding prohibited transaction, self-dealing and related party issues.
Independent Management Service for LLCs
Exeter Exchange Management Corporation ("EEMC") can serve as the independent LLC Manager for the investors' Limited Liability Companies ("LLCs") that have been set-up and are owned by/through their Self-Directed IRA. EEMC's management team has years of extensive experience and expertise in the administration of both Self-Directed IRAs as well as Alternative Investments.
Manager Services for LLCs
EEMC provides complete LLC management and administration services for the investors' LLC owned and held inside of their Checkbook IRA, including, but not limited to:
- Ensuring compliance with Internal Revenue Codes ("Tax Codes")
- Ensuring compliance with Treasury and Internal Revenue Service ("IRS") Regulations, Rulings and Pronouncements ("Treasury/IRS Regulations and Rulings")
- Asset documentation review
- Structure/Execution/Filing of all investment documents
- Accounting for the LLC and all investments held by the LLC
- Statements to investor and IRA Custodian or Trustee
- Tax reporting, if required, including IRS Form 1098 and 1099MISC
- Holding and safeguarding of investments and documents
You can obtain more information on Self-Directed IRAs, Checkbook IRAs and independent LLC Manager by calling (619) 239-3091 or (866) 393-8370 and speaking with one of our IRA Specialists.