The following is from the original site:
First I will answer a question I have gotten a few times when I told other people about using a checkbook controlled IRA. You do NOT need a custodian for your IRA LLC. I mean they don’t really add any value to your assets or investments. Unfortunately, the IRS requires that you have one. So since you must have one to be legal, we need to make sure we select one that provide the best benefit to cost ratio. In my case, that means selecting the custodian with the least possible cost, because for me, I don’t really require any other help from the custodian.
IRS regulations require that a qualified custodian hold the IRA assets on behalf of the IRA owner. In the old days, the IRA custodian would maintain the assets, perform all the IRA transactions, keep records pertaining to the transactions, file the required IRS reports, issue statements to the IRA owner, and perform other administrative duties on behalf of the self-directed IRA owner for the life of the IRA account.
The IRS regulations for a self-directed IRA are exactly the same as for a traditional IRA. In fact, a self-directed IRA is a traditional IRA. The difference between the two is simply a matter of what the IRA invests in. In our case, our IRA will be investing in a LLC that we happen to manage. All IRS rules regarding IRAs apply equally to the IRA regardless of the custodian or the way the IRA is set up.
WARNING: Using a Checkbook IRA Could Be Illegal!
If you do a Google search for IRA with Checkbook control, you will probably find a website that has this statement as its headline. In fact, several of the old line custodians have a link to this website to convince you NOT to use a IRA LLC with checkbook control.
When you visit these old line custodian’s website, you will see lots of statements like the following which they use to scare you.
1. A custodian holding retirement assets also helps individuals and advisors conform with often-complex IRS rules and regulations governing assets held in qualified plans, such as an IRA.
Sure, they will help you, but the fact is every single one of them put a statement in their agreement which they require you to sign that states something similar to: “My account is self-directed and I, alone, am responsible for the selection, due diligence, management, review, and retention of all investments in my account. I agree that the Custodian and Administrator are not a “fiduciary” for my account, as the term is defined in the Internal Revenue Code, ERISA or any other applicable federal, state or local laws.”
SO yes, they will “help” you, but the bottom line is every decision involving your IRA is YOURS, and every consequence of those decisions will fall on YOU!
2. The Operating Agreement preparer must be an attorney or a facilitator company whose standard documents have been reviewed by legal counsel. Operating Agreements prepared by the IRA Participant, an accountant, or websites such as LegalZoom.com or BizFilings.com are not acceptable.
Poppycock! The old line custodians who put this kind of requirement on their customers do so for one reason and one reason only. They don’t want you to have a IRA LLC with Checkbook control, because when you have control of your assets, they lose money! The fact is you can legally do all of the paperwork and filings yourself.
3. In order to assure that the LLC conforms to the requirements and prohibitions of the Internal Revenue Service and Department of Labor, I will have all transactions of the LLC reviewed by the attorney, accountant or other third party professional named below at least annually to avoid any action that would disqualify the IRA.
What a crock of “you know what”! This statement is from one of the larger traditional IRA custodians, and what it means is they are really ticked that you might be able to manage your IRA assets without giving them a chance to rack up exorbitant fees for unnecessary services. In fact, if they can’t hose you, they try to make it even more painful for you by making you pay an attorney to review every single transaction.
They even try to create more doubt in your mind by throwing in a reference to the Department of Labor. Department of Labor? LOL… what total goofiness.
Some Custodians Hate Self Directed IRAs with Checkbook Control
Many traditional old line custodians do NOT like Self Directed IRA LLCs with checkbook control. There are several reasons for this and without indicting any particular custodian, almost all of the reasons come down to one fact. If you have your own IRA LLC, then you will pay less money to the custodian. Ouch!
When you are deciding which IRA Custodian to use, you will want to examine their fee schedule closely. One major reason for setting up you Self Directed IRA LLC is to avoid paying ridiculous fees for unnecessary services.
Scenario #1 – So do you want a custodian that charges a fee that is based upon the amount of money in your account? Do you want to pay more for your account just because you have more money in it? The answer should be NOPE! The custodian does exactly the same amount of work for a client who has $100k in his account as he does for a client who has $1M in his account. A Custodian who does this is trying to screw you. Just walk away.
Scenario #2 – The custodian charges fees for a long list of services. Of course this kind of custodian makes his money by charging you every time any kind of transaction occurs. This is an anathema to what we are trying to accomplish. Just say Nope and walk away.
Scenario #3 – The custodian charges only an annual account maintenance fee. Other fees are only charged if you are unable to handle the transaction inside your LLC. Yep! This is the kind of custodian we are looking for.
Which Custodian Did I Chose for My IRA LLC With Checkbook Control?
After an extensive review of possible custodians, I chose:
Provident Trust Group
8880 W. Sunset Rd., Ste 250
Las Vegas, NV 89148
Toll Free: 888-855-9856
Their website is: http://www.trustprovident.com
First, I want to make it completely clear. I do not have any kind of affiliation with Provident Trust other than the fact that they are the custodian for my IRA. They do NOT pay me any money. They do NOT give me any advantage of any kind other than great service which I believe they give to all their customers.
So far, they have been very helpful in setting up my account and in leaving me alone to manage my retirement assets in the manner than I deem best. They have great customer service. I would mention names, but the fact is every single person I have talked to at Provident did a great job for me.
Having said the above, if their service begins to slip or I find a better deal with another custodian, Provident will be a fading image in my rearview mirror.
See you next time.