Self-Directed IRA: Single-Member LLC Adding a Member??
I ran into this problem this weekend & was hoping it might be one someone else had encountered too. Any advice is appreciated! So a couple years back I started a self-directed IRA and also a self-directed HSA. Each one invested into its own single-member LLC. I asked around & was told that my IRA and HSA could both invest into the same LLC. So i decided i would go that route! 😀
Now I am trying to figure out how my single-member LLC can add a new member (my HSA) and be IRS compliant. When i created it, it defaulted as a disregarded sole proprietorship. It looks like I would have to elect with the IRS to change this LLC from a sole proprietorship to a partnership or corporation? If so, will I also need to start filing tax returns for the LLC with the IRS? 🙄
Permalink Submitted by Jose Morales on Mon, 2012-08-20 16:49
My advice would be to consult with an attorney that specializes in LLC tax law and a CPA as well, regarless of any information you may obtain through web searches. Your “self directed IRA” custodian should be able to direct you to someone that could help you with this.
Permalink Submitted by Jaime Raskulinecz on Fri, 2012-08-24 15:57
So, single member LLCs are fraught with possible problems all by themselves. However, since you and all your accounts are disqualified people/entities, once you set up these LLCs with your IRA as a sole member it would be a prohibited transaction to then later add the HSA or other entity. This is because in essence, you are taking membership units away from the IRA and transferring them to the HSA.
You can discuss this in more detail with any of my staff members if you wish. We are a self directed retirement plan administrator.
Jaime Raskulinecz, CPM, CEO
Next Generation Trust Services