Keep Your LLC in Compliance
By Alisha Bennett
Once your Check Book IRA is set up, it’s extremely important to keep your LLC in compliance with any State filing requirements. The flip side to the freedom of managing your investments is that you are responsible for any filings that the State may require.
Your IRA Custodian considers this to be part and parcel of your responsibility as the Manager. If you fail to comply with LLC filing requirements, the State could administratively dissolve the LLC. This puts your retirement at risk as your funds could then be considered unprotected by the IRA status and subject to distribution taxes (and penalties if you haven’t reached distribution age yet).
This website provides an easy way to see what your State requires each year: https://www.nolo.com/legal-encyclopedia/50-state-guide-annual-report-tax-filing-requirements-llcs
Also, beware of scam letters asking for large fees to file annual reports on your behalf. You can file required reports yourself by going to your State’s website.
If your State does require an annual fee, please note that the fee must be paid with funds from the LLC. Do not use personal funds to pay LLC fees.
There’s a reason the penalties are so severe; to prevent abuse and misuse of IRA funds. Utilizing your own specific knowledge to grow your wealth using a Check Book IRA can be powerful. And with great power comes great responsibility.
I file the required IRS document every year which is the 5500 EZ. I was not aware that Colorado may require a document to be filed. If so why was I not made aware of that sooner, we have been with Checkbook IRA for several years now.
Hi Stuart, you have a Solo 401(k) not an IRA LLC. In other words, you have no LLC to do any filings for each year. The structure you employed (the Solo 401k) doesn’t use an LLC. The only filing requirement of a Solo 401(k) is the Form 5500-EZ, so you’re good.