Can I partner with friends and family in my LLC?
Yes, but partnerships with disqualified persons are only allowed at the time your IRA LLC is created. It can be a great way to raise additional capital for the purchases you want to make. The percentage of ownership in an LLC is determined by the capital contribution.
Is having an LLC in my IRA permitted?
Yes, it’s legal. The Internal Revenue Code doesn’t list the types of assets that you can invest in; it only states what you cannot invest in. The only two prohibited assets are life insurance and collectibles. Because an LLC is not a prohibited asset, it is a viable investment for your self-directed IRA.
What are the advantages of using an LLC versus just having my self-directed IRA purchase an asset?
Some of the advantages of using an LLC in your self-directed IRA include:
• Control—you literally have a checkbook that is linked to a checking account that is set up in the name of your LLC under its own tax ID number. When you identify an investment that you want to purchase, you can just write a check. You don’t have to fill out paperwork, get approval from the administrator, or wait for someone else to fund the investment—you can take care of it yourself. This can be particularly helpful in investments that have a limited time period or are being auctioned.
• Cost—Checkbook control can help you avoid transaction fees and check-writing fees that are typically associated with a self-directed IRA. If you own multiple investments in your LLC, your administrator only charges you for one asset, the LLC.
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