CAPITAL IRA DISCOURAGES SELF-DIRECTED IRA CHECKBOOK CONTROL

There are many companies that advertise “checkbook control” self-directed IRAs.  Capital IRA does not promote or advocate the use of this type of self-directed IRA, although in some cases an LLC (but not “checkbook control”) can be extremely useful for multiple investors and other situations. 
Basically, self-directed IRAs that utilize “checkbook control” involve setting up an LLC for investing IRA funds.  The IRA owns some or all of the shares of the LLC.  The managing member of the LLC, which is usually the taxpayer, writes checks directly from the LLC for asset purchases by the IRA.  Proponents of this method of self-directed IRA investing emphasize reduced custodial and administrative fees and stress the added advantage of total control without the taxpayer having to comply with the guildelines of a custodian or administrator.
However, although most types of investments are permiited using IRA funds, the risk of creating a prohibited transaction using the “checkbook control” LLC approach is very high. It is very easy to inadvertently do something within the LLC that might disqualify the entire IRA. In addition to the potential for incurring penalties and additional taxes, a disqualification of your IRA would wipe out future tax and other benefits from having the IRA.  Other costs can be high, too.  Many firms charge a very high fee for LLC setup, and there will be future accounting, corporate and tax costs and fees associated with the LLC, along with recordkeeping requirements.  The other issue concerns whether the IRS will simply disqualify a checkbook IRA at some point.  Our company has determined that when the taxpayer controls the funds directly in the management of their IRA, an inherent conflict of interest has occurred.
Capital IRA has the unique knowledge and expertise to work with you through the myriad of rules and regulations that will keep your IRA intact as you proceed through the steps of controlling your own investments.  We also have unmatched legal, real estate, title, financial and tax experience, and have the unique ability to serve as a “one stop shop” for your self-directed IRA.   
This is not an area to involve yourself in a “do it yourself” project.  The costs and the risks are too high, and the benefits are ambigous at best. 
If your proposed transaction would benefit from the use of an LLC, Capital IRA will let you know, and will guide you through the creation and use of the LLC properly and professionally at an extremely reasonable cost.