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Self-Directed IRAs

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What is a SDIRA?

Learning Center

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Learning Center Overview

Access the largest knowledge base for Self-Directed IRAs. Expand your investor knowledge with articles, whitepapers, practical guides and tons of other educational resources.

About Entrust

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What We Do

For 40 years, The Entrust Group has provided account administration services for self-directed retirement and tax-advantaged plans. Entrust can assist you in purchasing alternative investments with your retirement funds, and administer the buying and selling of assets that are typically unavailable through banks and brokerage firms.

LLC

There are many investment strategies you can use with your Self-Directed IRA (SDIRA). Some investors invest in alternative assets directly with their SDIRA, some prefer to purchase these investments through an LLC their IRA owns.

Managing your investments through an LLC your IRA owns means that in the eye of your SDIRA provider, you own a single asset: the LLC.

Benefits of an LLC

  1. Liability protection

    Like a corporation, having an LLC shelters you from any personal responsibility for the entity’s debts and obligations.

  2. Fast transactions

    Typically, executing transactions for your retirement account requires communicating electronically with your SDIRA provider or filing paperwork — leaving you (and your transactions) at the mercy of their processing speed. With an LLC, the funds you deposit into your LLC’s checking account are readily available. Your transactions become as simple as writing a check due to checkbook control.

  3. Fewer administrative fees

    Establishing checkbook control makes you less reliant on your custodian; you’ll file less paperwork. The less your administrator has to do on your behalf, the less they charge you.

    There is also a potential cost-saving where SDIRA record-keeping fees are concerned. As the IRA’s investment is now simply the LLC rather than its underlying investments, you only pay for one asset.

What Your LLC Can Invest In

Since the LLC is owned by your SDIRA, you can invest in everything an SDIRA can invest in; from:

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real estate

to
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precious metals

to
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private equity

The same three restrictions apply: you can’t invest in collectibles, s-corporations or life insurance.

Your LLC is governed by the same laws as your SDIRA.

Checkout our SDIRA Rules for more info
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Streamline Your Investment Strategy with an IRA LLC.

Discover the power of checkbook control. Download your free self-directed IRA guide today.

LLC Income & Taxes

Your SDIRA invests in and owns the LLC. Since an IRA is a tax-deferred entity, there is no taxable event in your IRA when investing through the LLC. It is vital, however, that any income or expenses relating to assets purchased by the LLC be paid to/from the SDIRA, which holds membership with the LLC to avoid taxation. Income from the LLC cannot be paid directly to you.

Depending on the type of income received by the LLC, it may be subject to unrelated business income tax (UBIT). The IRA may have to file a tax return if the income the LLC receives is taxable.

Taxable income received by an IRA, which is considered a trust, is taxed at trust tax rates. Income derived from a trade or business is taxable to the IRA. Income received from a leveraged investment will be taxable on the leveraged portion.

Other incomes such as interest, rents, royalties aren’t taxable income to the IRA.
The IRS Publication 598 sheds additional light on this topic.

Is an LLC Right For You?

 
Investing Through
an LLC
Investing With a Regular
Self-Directed IRA
Lower SDIRA Fees*
Easy to Use
Checkbook Control
Tax-Free and Tax-Deferred Gain
Online Account Access
Entrust Files Required Paperwork to Keep Your Account Compliant with the IRS
Entrust Facilitates Buying and Selling of Your Assets as Directed
Entrust Pays Expenses on Behalf of Your IRA
Fees associated with the LLC setup
Owner/manager is Fully Responsible for IRS Compliance
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Not sure if an LLC is for you but still want lower fees and faster transactions? Check out our myDirection Visa Card. It’s an easy way to pay your real estate assets expenses on the go without the hassle of establishing an LLC.

How to Establish an LLC

To establish your LLC you’ll need to create an LLC operating agreement and file paperwork in the state where the LLC is domiciled.

Consulting legal counsel that is knowledgeable about IRAs and the state laws governing them is advisable. A knowledgeable attorney can build parameters into the operating agreement that prevent the LLC from engaging in prohibited transactions.

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Here’s a list of contacts Entrust account holders have been used to establish single-member LLCs.
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Have questions about Entrust? Book a free consult

The Entrust Group does not offer investment, tax, financial or legal advice. Individuals who believe they need advice should consult with the appropriate professional(s) licensed in that area.