Roll the funds
Pick an experienced custodian
As popularity of the self directed plan grows, so does the number of self directed custodians available. Choose one that has been in business for a long time. Also, make sure they don’t prohibit investment into an LLC managed by you. Some custodians are overcautious because of their unfamiliarity with the law and recent rulings.
When creating an LLC, always use a qualified attorney
Many people choose to invest their new self directed IRA into an LLC managed by them. When organized properly, doing so doesn’t break any rules or trigger any taxes or penalties. However, organizing one properly isn’t easy to do by yourself. Tax laws, IRS rulings, Dept of Labor rulings, and case law are CONSTANTLY changing. Because of this, it is highly advisable to never involve an LLC into your investment strategy without qualified legal opinion. Most qualified attorneys won’t provide legal opinion on LLCs or Corporations which they did not form themselves because doing so would generally be more time consuming and expensive than forming a new, fully compliant LLC or Corporation.
Beware of DIY Kits
Jumping into the frenzy, offers are popping up everywhere for “Do-It-Yourself LLC Kits” for self directed IRA investing. Everybody likes to save money, and companies offering these kits are cashing in on that. Most likely, if you create your own IRA LLC, the taxes and penalties will be “Do-It-Yourself” as well. The importance of using a qualified attorney and getting legal opinion lies in the fact that the attorney is liable for the accuracy of that legal opinion. A company selling a DIY kit isn’t liable for anything. The entire risk stays on you. If you have a $100k IRA and you use a kit in an effort to save $2k, and then you lose over $40k to taxes and penalties… how much did you really save?
Have your transactions reviewed
IRAAA offers its members free transaction reviews. Prior to closing, submit the appropriate documents related to your transaction to the association, and we’ll review it for free. If we find a potential prohibited transaction, we’ll bring it to your attention before it occurs. Additionally, each free transaction review will include an offer for discounted transaction-specific legal opinion from an IRAAA affiliate attorney.