The Check Book IRA Trust
“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.
What is a Check Book IRA Trust?
It is a combination of a Self Directed IRA owning a TRUST and you being the Trustee. A TRUST is an option because it is an 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. There is also no annual reporting dependent on the state you are doing business in.
The IRA will own 100% of the TRUST and this makes it a “flow through” tax entity. This means the owner, or the IRA, pays the taxes. The TRUST itself will not pay any taxes, rather, it’s the owner of the TRUST that is liable. But in this case, the owner is your IRA. So, if the TRUST has earned the profits, they pass to the IRA and there’s no tax until you take an IRA distribution.
With the IRA TRUST the IRA has only ONE asset – the TRUST. Your annual IRA Custodial fee is only $150 per year regardless of the value of the account. Though the IRA only has one asset, the TRUST may own dozens of assets, and you control the TRUST as the Trustee. You can see an overview of our setup fees here, and the costs to maintain the structure annually.
The TRUST does all the investing so you have control over all the investment decision. You must follow the guidelines in the TRUST’s Trust 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 when investing because you now have written permission in your 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 TRUST.
As Trustee of the TRUST, you may open a business TRUST checking account locally. You now may write checks and as Trustee make instant investment decisions and sign all documents that may be required.
You simply have MORE immediate control of 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 TRUST 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.
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Real People, Real Stories, Real Successes
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 them. You won’t find anyone more straight forward or honest.
Setup was very easy. I was able to call [Steve] and Jordan even on a weekend and got some answers on how to actually proceed and felt that it was professionally done. It wasn’t hard to do by any means. It didn’t take a lot of time. The information that was set up was very self-explanatory. I did have a few questions like I said, and I was able to get answers even on a weekend. So I found it really an easy process to get it setup and done.
[The staff] has been fantastic. I can call and talk to somebody right away. I can ask, what seems to me, maybe a mundane question but never is to the person on the other end. It’s immediate satisfaction of what my needs are at that particular time and great responsiveness. And really, really good information.
I wish I had found Checkbook IRA before I signed up with another facilitator!
I was happy enough with the person who set up my Checkbook IRA until I began asking questions and then would get excuses of family problems, being away, and broken promises of getting back to me.
Jordan of Checkbook IRA was so fantastic – answering my questions, even if I didn’t sign up with him. If I could, I would love to switch to him but his ethics would not allow that.
Even so, Jordan is willing to answer and guide me so I stay in compliance with my IRAs – without charging me for anything!
He is truly a good soul, and I would highly recommend him and his company to anyone wanting to open their Checkbook IRA.
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What Are the Steps, In a Nutshell
- You fill out an application with us online and pick out a Trustee name.
- You pay a $300 deposit via an E-Check.
- We help you open a new IRA account online with our qualified custodian.
- Paperwork is started to move your IRA(s) cash or assets to them as your new custodian.
- We prepare the Trust documents, filings and pay all state filing fees.
- An EIN tax identification number is secured from the IRS.
- You open a TRUST business bank account.
- When your assets are received by new Custodian they are transferred to the TRUST.
- There is no tax return to file and no reporting to New Mexico or Missouri for the TRUST
- Annually your custodian will charge your credit card $150 as a custodial fee.
- Each December you submit a one page report stating the current value of the TRUST.
- Set up takes 2-3 weeks depending on how quickly your custodian transfers your funds.
