Checkbook IRA
Are self-directed IRA’s allowed to be invested into single member LLC’s whereby the managing member is the IRA owner (i.e. is a self-directed IRA with check-book control allowable under current IRS code)?
Are self-directed IRA’s allowed to be invested into single member LLC’s whereby the managing member is the IRA owner (i.e. is a self-directed IRA with check-book control allowable under current IRS code)?
Permalink Submitted by mk foss on Fri, 2009-01-23 19:55
If the IRA “invested” in a single member LLC, it would no longer be a single member LLC.
If the IRA owner (or a relative of the owner) manages real property owned by the IRA – that could be a prohibited transaction which may disqualify the IRA. If the IRA owner benefits in any way from an investment of the IRA, that could be a prohibited transaction.
You also would need an IRA custodian that would allow such an investment – you can’t be your own custodian.
So the answer is – the IRA could invest in the LLC but it would likely disqualify the IRA and make the entire balance taxable.