Managing Your Check Book IRA: What’s Your Responsibility?

By Alisha Bennett

Life Settlements in a Retirement Account? Think Again.

As Manager of your LLC or Check Book IRA, you have a fiduciary responsibility to act in the best interest of the LLC. But, what does that mean in practice?

Beyond obeying the regulations when it comes to prohibited transactions or dealing with prohibited parties the interests of the LLC must come first in any and all investments.

For example, a client was blessed with an excellent return on his investment.  He wanted to take the opportunity to pay it forward in the form of an education grant to a student or an outright donation for a student’s tuition.  A worthy thought, but given his responsibility as Manager to the LLC; he wasn’t able to do this with his LLC/Check Book IRA.  Giving away funds to a charitable cause in this case is not in the best interests of the LLC.

What about when making an investment?  A client contacted me regarding making hard money loans; but he wanted to use way below market interest rates to help out a friend.  Again, the LLC’s best interests must be taken into consideration.  So, at minimum, standard loan interest rates and terms should apply to any hard money loans.

As the Manager, keeping the LLC’s interests (and your future retirement funds) first and foremost in mind should guide any transactions you make.

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