How to ADD Funds to your Check Book IRA LLC

By Steve Sheppherd

There are several reasons a manager might want to add funds to their IRA LLC, the most common being an annual contribution. However, they may want to close other IRA accounts and move them into the CheckBook IRA to have better access. Also, don’t forget, that when you leave your employer or you turn 59 1/2, you may move your 401(k) into your IRA LLC.

In any case, the method for adding funds is the same for each of these scenarios. First, you simply deposit or transfer the funds to your custodian. There is no charge for this. Next you fill out an “Investment Authorization Form” to let the custodian know that you want to invest these new funds into the LLC as an “add on” investment. The custodian will charge you a $40 investment fee. However, once the funds are in the LLC, you’re free to invest them without any additional fees.

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2 Comments

GC on November 9, 2016 at 1:41 pm

Hello,

Thank you for setting up this website. The information is very helpful. My question is three-parts.

At initiation of a checkbook IRA, are you able to move money from your 401(k) at a former employer to the checkbook IRA?

Throughout the life of the checkbook IRA, are you able to contribute after-tax dollars to a Checkbook IRA after you have contributed funds from a 401(k)? I want to ensure that contributing before- and after tax dollars into a checkbook IRA is permitted.

Similarly, is there any restriction on contributing funds from a ROTH IRA into a checkbook IRA if one has already contributed funds from a 401(k) at a previous employer and after-tax contribution dollars from a paycheck?

Thank you in advance!

Jordan Sheppherd on November 16, 2016 at 8:04 pm

Hi GC,

One thing before I start answering your questions. A “Check Book IRA” is not a special type of IRA. Its a term we use to refer to an IRA LLC structure. So, the IRA that owns the LLC in that scenario can be whatever type of IRA you want; a Traditional IRA, SEP IRA, SIMPLE IRA, or Roth IRA.

1. Yes, you can roll an old 401(k) into a Traditional IRA. You can also roll a 401(k) into a Roth IRA if you are willing to convert those funds and pay the taxes on the converted amount.

2. If you’re wanting to contribute after-tax dollars, you have to contribute those after-tax dollars into a Roth IRA. There is no IRA that will accept both before-tax and after-tax contributions; its either or. If you have a Traditional IRA that you’ve rolled old 401(k) funds into, you cannot make after-tax contributions to that Traditional IRA, because a Traditional IRA is a before-tax or tax deferred account – you’d need to open a separate Roth IRA, which could accept the after-tax contributions.

3. Contributing to a 401(k) can affect your ability to contribute to an IRA, so you’d need to check with your CPA on this, and have him run the numbers to see what you qualify to put into an IRA.

thanks!
Jordan

GC on November 9, 2016 at 1:41 pm

Hello,

Thank you for setting up this website. The information is very helpful. My question is three-parts.

At initiation of a checkbook IRA, are you able to move money from your 401(k) at a former employer to the checkbook IRA?

Throughout the life of the checkbook IRA, are you able to contribute after-tax dollars to a Checkbook IRA after you have contributed funds from a 401(k)? I want to ensure that contributing before- and after tax dollars into a checkbook IRA is permitted.

Similarly, is there any restriction on contributing funds from a ROTH IRA into a checkbook IRA if one has already contributed funds from a 401(k) at a previous employer and after-tax contribution dollars from a paycheck?

Thank you in advance!
- Jordan Sheppherd on November 16, 2016 at 8:04 pm
  
  Hi GC,
  
  One thing before I start answering your questions. A “Check Book IRA” is not a special type of IRA. Its a term we use to refer to an IRA LLC structure. So, the IRA that owns the LLC in that scenario can be whatever type of IRA you want; a Traditional IRA, SEP IRA, SIMPLE IRA, or Roth IRA.
  
  1. Yes, you can roll an old 401(k) into a Traditional IRA. You can also roll a 401(k) into a Roth IRA if you are willing to convert those funds and pay the taxes on the converted amount.
  
  2. If you’re wanting to contribute after-tax dollars, you have to contribute those after-tax dollars into a Roth IRA. There is no IRA that will accept both before-tax and after-tax contributions; its either or. If you have a Traditional IRA that you’ve rolled old 401(k) funds into, you cannot make after-tax contributions to that Traditional IRA, because a Traditional IRA is a before-tax or tax deferred account – you’d need to open a separate Roth IRA, which could accept the after-tax contributions.
  
  3. Contributing to a 401(k) can affect your ability to contribute to an IRA, so you’d need to check with your CPA on this, and have him run the numbers to see what you qualify to put into an IRA.
  
  thanks!
  Jordan