One of the most frequent questions I hear is, “What will this structure cost me annually?” Bascially, you may have two types of fees each year. Custodian fees (for the IRA) and State fees (for the LLC).
Our Custodian Our Qualified Custodian Company, has a special pricing structure in place for the Check Book IRA setup. Their annual fee of $150 is very affordable. Additional fees may apply if you are contributing additional funds to the Check Book IRA structure or taking a distribution.
State fees, or fees for the LLC, depend on which State your LLC was organized in. For example, if you chose to organize your LLC in New Mexico you will have no annual fee or filing requirement because the State of New Mexico does not require one. Unless you live in New Mexico or have your Aunt Matilda serving as a registered agent, however, you will have an annual registered agent fee. Most registered agent fees are approximately $125; although they may differ from State to State as well.
The best way to ensure that you know your annual costs is to check what is required in the State you have chosen to file your LLC in. The link below is an excellent resource for reviewing what form and accompanying fees may be required in your State. It is always a good idea to have this information on hand ahead of time. Being surprised by an expensive tax such as the $800 excise tax required in California is not a pleasant experience.
It’s also worthwhile to mention here that fees for the LLC (registered agent, excise taxes, annual fees) must be paid from the LLC. While it is permissible for the Manager to write a personal check or send a money order for these fees; he or she must be reimbursed for these expenses from the LLC.
Fees for the IRA however may be paid from the IRA, from the LLC or paid personally. There is no risk of a prohibited crossover between personal and the IRA in this instance.
Either way, it is always a good idea to know what your annual costs will be; especially if you are investing primarily in metals. You will need to make sure that you have a little cash on hand to pay for these incidental expenditures.
I have two points of confusion:
1. Why would I need a registered agent for an LLC organized in my home state?
2. Are transaction fees from the IRA Custodian incurred for every transaction that takes place within the LLC? If not, what transaction fees would one typically incur from the IRA Custodian besides disbursements?
Thanks for the question, Zane.
Taking your questions in order:
1. By State and Federal law, every State formed entity (Corporation, partnership, limited partnership, etc…), in this case an LLC, has to maintain a Registered Agent in that State. If you decided to have us form the LLC in your home State, you can certainly serve as the Registered Agent. Some people advise against it, and claim its better to hire an agent who is available to accept service of process every day during business hours, but if you feel comfortable serving as agent, you certainly can. By law though, even if the LLC is formed in your home State, the company still must maintain a Registered Agent.
2. The LLC, being a private company, does not incur Custodial fees. Any investments made by the company, any contracts that are executed, etc… would not incur any fees from the Custodian. As a result, the fees you could expect would be whatever the Custodian’s yearly maintenance fees are, in the case of Our Qualified Custodian $150 per year. The only time transaction fees are charged to the IRA is if the IRA is making an investment, so if you were to add more funds to the LLC after the initial setup by rolling over a 401(k) or transferring another IRA, your account would incur a transaction fee when the IRA goes to add that money to the LLC’s bank account, because from the Custodian’s point of view, the IRA is making an additional investment into the LLC, and as such a transaction fee would be charged.
If you have any other questions, feel free to call our office, or email me directly at jordan [at] https://www.checkbookira.com