Can I Trade Stocks in my CheckBook IRA LLC?

By Jordan Sheppherd

Wall Street

I received the following question from a current client in Ohio:

Hi Jordan,

 


I was wondering if it’s ok for me to trade stocks in my Check Book IRA? As you know, I’ve been investing primarily in real estate, but sometimes it takes me a while to find another investment, and I’d like to have some place to park funds in between deals. Do I go to my Custodian and ask them to set up an account?

 

Tim, Ohio

My response:

Hi Tim,

 

I’m glad to hear you’re doing well with real estate. You can certainly trade stocks with a CheckBook IRA LLC, but you don’t need to go to your Custodian to have them open an account. Remember that your IRA owns the LLC, and if you want to use the LLC to trade stocks, you would need to open an account in the name of the LLC. You can use any company you’d like: Scottrade, TD Ameritrade, E*Trade, etc… You would simply go to one of those companies and open a trading account in the name of the company. You can then trade the account yourself or have a broker do it for you. 

 

It is important to remember that you would be able to have margin privileges for the trading account, but the account could not borrow funds against the trading account, nor could the IRA LLC ever have a debit balance in the account as a result of margin; all transactions would have to be fully secured by liquid assets within the account. Remember that any expenses related to opening or maintaining the account or for individual trades would need to be paid by the IRA LLC. You may have some questions about the account paperwork, so if anything doesn’t make sense, let me know.

 

Jordan

Invest intelligently.  Enjoy the rewards.

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    6 Comments

    1. Brad Jones

      I have an account with Scottrade. When I opened the account, I had to fill out a W-9 for tax reporting purposes. Whose Tax ID number am I supposed to give, mine, the LLC, or the IRA custodian?

      • Jordan Sheppherd

        Hey Bradley,

        The EIN on the W9 should be the Custodian’s. I’ll email you a example W9 for an IRA LLC.

        Folks, keep in mind that Bradley is a client of ours, so if you’re not a client of ours, your situation may be a bit different; especially if your IRA has it’s own separate EIN.

        • Karen Baumgardner

          Hello Jordan, this is great so we can open an account in the solo llc use that EIN# and just send a check to fedelity or Scott Trade? Karen in GA

          • Jordan Sheppherd

            You have a Solo 401(k), so you would open the account, just in the 401(k)’s name. No need to involve the LLC or anything like that, as the LLC in your case is the sponsor company. Call me if you want to go through the documentation.

    2. Jim McElroy

      How would this work with a Solo 401k verses an IRA? What information would Scottrade need to open an account for a 401k?

      • Jordan Sheppherd

        If you have an IRA LLC, you can open a brokerage account in the LLC’s name and trade yourself. If you have a Solo 401(k) you open the brokerage account in the 401(k)’s name.

        Scottrade has a special application for “outside” 401(k)s, or 401(k)s that were not created by Scottrade, and are not trusteed or administered by Scottrade. You’d need to complete that application, submit portions of the plan’s documents, and it’s EIN, and sign the app as Trustee of the plan.