How Does it Work?The self directed IRA LLC functions in a similar manner to traditional IRAs. You, or whoever you designate as the trustee or custodian, will manage all of the assets, submit the reports to the government, issue statements, and provide regular updates on the status of the funds. You can designate just about anyone to serve as a trustee or custodian, including a business or agent that specializes in these types of transactions.
Why Set Up a Self Directed IRA LLC?While it isn't necessary for you to set this up, it can be a wise business move, because it allows you to provide for your future and your family's when you can no longer remain in business. You can create one with just yourself as the only business owner or you can create one with other partners and investors outside the business, depending on the kind of LLC you are forming and in what state.
What are the Tax Requirements?The IRS provides all of the requirements for qualifying accounts, but these requirements are informed by your individual state laws in terms of processing and required fees. Currently, the IRS does not detail what self directed IRA LLC investments can consist of, but it does explicitly state the things that you can never invest in through sections 408 and 4975. The most common prohibited investments revolve around self-dealing, such as investing in a family member's business or purchasing your own stock. Every year, you or the custodian must file IRS Form 1065 in addition to your regular taxes. Most states, including Indiana and Ohio, require that you file a similar form at the state level as well.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.