“We Started the Revolution”
“The tax court gave its blessing.”
In the 1996 case of Swanson vs. Commissioner, the tax court gave its blessing to a new type of self-directed IRA structure — the checkbook IRA — that is much simpler than investing through a regular custodial account.
Los Angeles Times Article
What is a Check Book IRA?
It is a combination of a Self Directed IRA owning an LLC (Limited Liability Company) and you being the manager. We use an LLC because it is a business entity that is a cross between a corporation and a partnership and is the PERFECT investment vehicle for your IRA! There are no tax returns to file nor any meetings, minutes or resolutions required. With a New Mexico LLC there’s no annual report or fee due.
The IRA will own 100% of the LLC and this makes it a “flow through” tax entity. This means the owner, or the IRA, pays the taxes. The LLC itself will not pay any taxes, rather, it’s the owner of the LLC that is liable. But in this case, the owner is your IRA. So, if the LLC has earned the profits they pass to the IRA and there’s no tax until you take an IRA distribution.
After the set up cost the annual fees to the custodian and the state can be as low as $100. With the IRA LLC the IRA has only ONE asset, the LLC. Our Custodial fee is only $100 per year regardless of the value of the account. Though the IRA only has one asset LLC may own dozens of assets. It’s like your IRA owning Walmart. It would have only ONE stock or asset but inside that one asset would be 4,000 stores. The same here except on a much smaller scale. You control the company (LLC) that owns and controls the assets. However, your IRA owns and controls the LLC.
The LLC does all the investing so you have control over all the investment decision. You must follow the guidelines in the LLC’s Operating Agreement. You have very BROAD authority with the exception of buying Life Insurance or Collectibles and dealing with your immediate family. It will be signed by you and the Custodian.
You no longer need to contact or notify the Custodian of investments because you now have written permission in you hand. This is why the Check Book IRA has become so popular with real estate investors as well as Tax Lien buyers. You can even buy property offshore or at auction. Another side benefit is the manager may hold cash or metals as an asset of the LLC.
As manager of the LLC may open a business LLC checking account locally. You now may write checks and as manager make instant investment decisions and sign all documents that may be required.
You simply have MORE immediate control to the IRA funds and as long as there are no “self dealings” it is perfectly legal. This has been around since 1996 but until recently it was mostly used for real estate investing.
Any gains on the investments of the LLC would incur no tax due until taken as a distribution by the owner. In addition, you may take assets that ARE NOT cash as a distribution if it is accompanied by a fair market valuation. This is so the proper value can be determined so the correct amount of income can be determined. If this is done then the asset would be taken as a distribution “in kind” and taxes would be owed the following April 15th on the appraised value of the asset distributed.
What Can't I Do?
What is a Prohibited Transaction?
WHY CLIENTS PREFER NEW MEXICO LLC's
- No Annual Reporting
- No Taxes or Fees
- No Public Record of Owner
- No Public Record of Manager
- Free Registered Agent the First Year
I met Steve Sheppherd on a golf course in 2010.
We talked about his company CheckBook IRA and the idea of a self directed IRA. I was sold immediately. I had my entire IRA in the stock market but never really felt comfortable there. I just didn’t understand the market or trust it.
My expertise was in real estate.
Steve showed me how I could buy and sell real estate, have rental properties and do hard money loans with my retirement money. He helped me set up my LLC and walked me through the entire process.
Today my IRA has grown substantially and I’m comfortable in what I’m investing.
If you’re on the fence about doing a self directed IRA, contact Steve or Jordan and talk to then.
You won’t find anyone more straight forward or honest.Deane Cooper
When I learned about self directed IRA’s, I emailed several companies for information stating I wanted to set one up but would have to do via email as I cannot hear on the telephone.
Jordan was the ONLY one that honored that request.
All others kept calling, disregarding my request. Every question I had, Jordan answered by email. I have already purchased a property using my LLC and the transaction went just as expected.
You can trust what he tells you and that is all that can be asked.Tom Holloman, PhD
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What Are the Steps, In a Nutshell
- You fill out an application with us online and pick out an LLC name.
- You pay a $300 deposit via an E-Check.
- We help you open a new IRA account online with our custodian, The Kingdom Trust.
- Paperwork is started to move your IRA(s) cash or assets to them as your new custodian.
- We prepare the LLC documents, filings and pay all state filing fees.
- An EIN tax identification number is secured from the IRS.
- You open a LLC business bank account.
- When your assets are received by new Custodian they are transferred to the LLC.
- There is no tax return to file and no reporting to New Mexico for the LLC
- You will be billed January 1st for $125 registered agent fee for your NM LLC.
- Annually your custodian will charge your credit card $125 as a custodial fee.
- Each December you submit a one page report stating the current value of the LLC.
- Set up takes 2-3 weeks depending on how quickly your custodian transfers your funds.