Finally buying CryptoCurrency

My self directed bank account is funded. The final step is to open an institutional trading account with a cryptocurrency trading firm that accepts fiat. I recommend two firms.

  1. Coinbase 
  2. Gemini

The process is takes about two weeks. On Coinbase apply for Coinbase Prime on Gemini apply for an institutional account. After you complete the initial application you should  here from them with in a week.  When you are approved  transfer fiat onto the firms trading platform and start trading.


Selecting a Custodian for your Self Directed IRA LLC with Checkbook Control

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 or 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
Phone: 702-434-0023
Fax: 702-253-7565

Their website is:

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.

An Operating Agreement for Your Self Directed IRA LLC With Checkbook Control

My salutes to Depreist for this– I had to make a few slight changes to this due to the requirements of my IRA custodian. You also don’t have to put the number of shares. Again from the original site:

A standard LLC Operating Agreement will not meet the requirements for your Self-Directed IRA LLC. In general, a self directed IRA LLC Operating Agreement should include special tax provisions relating to “Investment Retirement Accounts” and “Prohibited Transactions” pursuant to Internal Revenue Code Sections 408 and 4975. In addition, since the LLC must be managed by a manager and not the member, the Operating Agreement would need to include special management provisions.

Some important things to remember:

1. You are the IRA owner.

2. Your IRA will own 100% of the LLC.

3. You do NOT own the LLC.

These things may seem self evident, but it is easy to get confused about these issues and confusion leads to mistakes. The entire tax benefit depends upon these facts.

Now, please remember the following is my opinion and you know what they say about opinions.

For single member LLCs, the Operating Agreement is of little practical use. I mean it is only an agreement with yourself, which means you can change it at any time for any reason or no reason. In fact, in the state of Texas, where I live, you are not even required by the state to have an Operating Agreement. The bottom line is: “It is not what you say, but rather what you do, that is important.”

For example: You could include a line item in your Operating Agreement that states you will not engage in any prohibited transactions. If later, you are found to have dealings with a disqualified individual, you will still be in trouble, regardless of what you wrote in the Operating Agreement. In fact, it may even go worse for you because the Operating Agreement will demonstrate that you were aware of the infraction beforehand.

Why do you need an LLC Operating Agreement?

My experience in the case of a single member LLC is you need the Operating Agreement for 2 reasons.

1. Your bank will require you to provide them with a copy when you set up your LLC business bank account.

2. Your custodian will require you to provide them a copy when they set up your Self Directed IRA Account.

Rules specific to a Self Directed IRA

The primary way that an Operating Agreement for a Self Directed IRA LLC with Checkbook control differs from a standard LLC Operating Agreement is how the IRS rules for Self Directed IRAs are handled. As I have said earlier, If you don’t follow the rules for self-directed IRAs, you can risk the tax-deferred status of your account. This could lead to the disqualification of the IRA and result in severe tax consequences.

Here is what you need to know:

At a minimum, your Operating Agreement must contain language to handle the following:

Prohibited Transactions and Investments: This is basically self dealing and certain investments such as collectables.

Disqualified Individuals: Your IRA may not buy an investment from or sell an investment to a “disqualified person.”

Indirect Benefits: The purpose of the IRA is to provide for your retirement in the future. It is considered to be an “indirect benefit” if your IRA is engaged in transactions that, in some way, can benefit you personally today.

UBIT: This is a tax that occurs when leverage is used to develop profits in investments.

Here are some additional rules that apply because we are forming an LLC for the purpose of checkbook control of our IRA funds.


The same IRA prohibited transaction rules that apply to an IRA apply to an IRA LLC.
An IRA may be a member of an LLC through the purchase of LLC units.
When an IRA is the sole member of an LLC, the LLC is deemed a single member LLC and thus classified as a disregarded entity. As such, an LLC where the single-member is an IRA, the LLC does not file a Federal business-tax return.
IRA can own a 100% of a newly formed LLC. Important: It is imperative that the LLC is newly registered and units issued for the first time. If not, the transaction may be deemed a prohibited transaction.
The manager of the IRA LLC may not be compensated if the manager is the IRA owner or a disqualified party (e.g., the IRA owner’s spouse, kids, parents, etc).
IRA LLC investments must be titled in the name of the LLC not your name or in the name of the IRA.
IRA LLC bank account may not to be co-mingled with your personal funds.
Investment gains and expenses must flow through the IRA LLC bank account. Therefore, if the LLC invested in a fixer-upper, you may not pay for such repair expenses with personal funds but rather use IRA LLC funds.
IRA owner is prohibited from personally guaranteeing debt on behalf of the IRA LLC. When an LLC obtains a non-recourse loan from a third-party, usually for investing in real estate, the LLC must secure the loan and thus LLC funds must be used to make the loan payments. I don’t use leverage like this because I just don’t want to fool with the UBIT rules.
Annual IRA contributions and IRA/401k transfers must flow to the self-directed IRA not the IRA LLC.
Those are the basics of what I have learned about making an Operating Agreement for an IRA LLC with Checkbook control. And… just to make it interesting, I have included a copy of the Operating Agreement that I currently use for my own LLC.


An Operating Agreement




How to Apply for an EIN for Your Checkbook IRA

These are the steps I took to get an EIN from the LLC Guide site:

An Employer Identification Number, also called a Federal Tax Identification Number, is how the IRS identifies your company. Basically, an EIN is a Social Security number for your Business.

According to the Internal Revenue Service, you need an EIN if you:

    Started a new business
    Hired or will hire employees, including household employees
    Changed the legal character or ownership of your organization (for example, you incorporate a sole proprietorship or form a partnership)
    Purchased a going business
    Created a trust
    Created a pension plan as a plan administrator
    Are a foreign person and need an EIN to comply with IRS withholding regulations
    Are a withholding agent for taxes on non-wage income paid to an alien (such as an individual, a corporation, or a partnership)
    Are a state or local agency
    Are a federal government unit or agency
    Formed a corporation
    Formed a partnership
    Administer an estate formed as a result of a person’s death
    Represent an estate that operates a business after the owner’s death.

However, the reason you need an EIN is so that you can open a business checking account at your local bank. Banks will just NOT give you an account without one. It would be mighty hard to have a checkbook IRA without a checkbook. Luckily, getting an EIN is fast and easy.

Applying for an EIN is a free service offered by the Internal Revenue Service. Beware of Web sites on the Internet that charge for this free service. There is absolutely no need for anyone to pay to obtain an EIN.

You can apply for an EIN in a number of ways, including Fax, Mail, Toll-Free over the phone, or online. Since you are reading this on my website, I assume you have internet access, so that’s the way we will apply.

How to Apply Online

The Internet EIN application is the preferred method for customers to apply for and obtain an EIN. The process takes less than 10 minutes, and after the application is completed, the information is validated while you wait and an EIN is issued immediately.

The online process is pretty easy to follow, but here is some info you will need to complete the application:

1. You must have your social security number to use the online application.
2. You are applying for a Limited Liability Company (LLC) business structure.
3. You are probably creating a single member LLC, so when it asks for the number of members, you will probably enter “1”.
4. When they ask why you need the EIN. Select “Banking Purposes”.
5. When they ask, “Who is the Responsible Party of the LLC?” Select “Individual”. That is you, by the way.
6. For now, when they ask, you will select, “I am one of the owners, members, or the managing member of this LLC.”
7. When they ask where your LLC will be located, you can fill in your home address, unless you intend to have an actual business address.8.

Review your information. If you have made any mistakes, you will have to hit the re-start button and start all over again. It should take less than 3 minutes for the IRS to issue an EIN number to you via the internet. Print out a copy for your records and you are ready to go.

See you next time.


How I Formed My IRA LLC

I am pretty much quoting the Depriest  site verbatim. I will add that the first step I took was to find my IRA custodian. I am in Texas also.

What is a Self-Directed IRA LLC?

First, the LLC, Limited Liability Company, that you will form is not really an IRA LLC.  Rather it is simply an LLC that will eventually be owned 100% by your IRA.  As long as you don’t run afoul of the prohibited transaction rules, this is really no different than investing in any other opportunity such as stocks in a publicly traded company.  In our case, the IRA, NOT you will own all the units in the LLC.  The same prohibited transaction rules applicable to the self-directed IRA, apply to the self-directed IRA owned LLC.

So, in a nutshell, an LLC that is owned 100% by a self-directed IRA is deemed a single member LLC for tax purposes, which means that the LLC will not be required to file a Federal tax return. This is because all income of the LLC flows through the company to the owners of the company usually by way of a form K1.  Remember, you are not the owner of the LLC.  The self-directed IRA is only required to file a Federal tax return (Form 990T) if taxes are due (e.g. UDFI or UBIT).  I’ll try to explain these cases in a later post.

What are the steps in forming your LLC?

There are probably a thousand companies on the internet that will form an LLC for you.  Do a google search and you will see what I mean.  These companies will charge you anywhere from $49 to $1000 to do the paperwork and filings for you. In addition, you will still be responsible for paying the statutory fees in whatever state you set your LLC up in.  You can also have the work done by a local attorney, but that will probably cost you even more.  In my opinion, doing the work yourself is so simple, you should strongly consider doing it yourself.  That is what I did.

I live in the state of Texas, so that is where I decided to form my LLC.  You may want to check out the rules for filing in your own state or even in some business friendly state like Nevada.  Anyway, the following steps are valid in the state of Texas.

1. Choose a Name for Your LLC

Under Texas law, an LLC name must  contain the words the words “Limited Liability Company” or “Limited Company,” or the abbreviations “L.L.C.,” “LLC,” “LC,” or “L.C.” “Limited” may be abbreviated as “Ltd.” or “LTD” and “Company” as “Co.”

Your LLC’s name must be distinguishable from the names of other business entities already on file with the Texas Secretary of State. Names may be checked for availability by at the Texas Secretary of State website, which is called:  SOSDirect.

This website is not very user friendly and trying to navigate it can be tricky.  So, read the provided information if you want, and then click on the button at the bottom of the page to actually enter the site.

Once you are in the site, you will be able to request for SOSDirect Account.

Follow the on-screen directions to set up your account and then log in.

At this point, you should be able to click on the “Business Organizations” tab at the top of the page.  You will find yourself at a page that will allow you to check for the availability of the name you have selected for your LLC.  By performing this search, you can tell if the name you propose to use is currently in use, reserved, or registered by a corporation, limited liability company, or limited partnership filed with the secretary of state.  The name you choose must be unique.  Enter the proposed name, something like “DePriest, LLC” and press ‘Search’. You will know immediately if your chosen name is available or not.

There is a $1.00 statutorily authorized fee associated with each name search.  However, this fee will not be assessed if an order request is then placed on the results of the search.


2. File your Certificate of Formation.

A Texas LLC is created by filing a Certificate of Formation with the Secretary of State. I believe the easiest way to do this is by filing online, but you can also download the forms and fill them in by hand and then mail them to the Secretary of State.  Just as FYI, some people refer to this document as, “Articles of Organization”.  However, in Texas the proper term is “Certificate of Formation.

The certificate must include:

a.  The LLC’s name.  This is the name you just found using the search function on the SOSDirect website.
b.  The name and address of the LLC’s registered agent.  Every Texas LLC must have an agent for service of process in the state.  Usually this will be you, but it could also be your CPA or your Attorney, or other person who agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a Texas resident or a business entity authorized to do business in Texas. The registered agent must have a physical street address in Texas. The LLC may not be its own registered agent.
c.  Whether the LLC will be member-managed or manager-managed.  It is very important that you select “manager-managed“.   You will appoint yourself as the manager of the LLC.  This is what allows you to retain control of the IRA funds and investments.
d.  The name and address of the LLC’s governing person and the name and address of the LLC’s organizer.  This usually you.
e.  The effective date of the certificate. I had my filing take place immediately.

That’s it.  The state will email your documents to you,  Just print them out and file a copy with your other important papers.  Whether you file online through the Texas Secretary of State SOSDirectwebsite, or by mail, the filing fee is $300.  If you use a credit card to pay the charges, there will also be a small convenience fee.

Congratulations.  You now have your LLC.


Welcome to Crypto Roth IRA

All jokes aside. I wanted to buy cryptocurrency in my retirement account. Specifically, I had a ROTH IRA that I wanted to use. When I looked into it a few years ago, I googled and all that I found in the search were sites like, which are fine. However, all of these kind of sites hold your keys and charge significant fees (30% of the value of the IRA).  I wasn’t willing to pay those high fees.  I looked into it again about a year ago and discovered that I can buy any cryptocurrency I want. I can hold the private keys without paying a large percentage of my portfolio. How? A checkbook-controlled ROTH IRA. It’s also called a self-directed IRA. Most folks use them to buy real estate with their retirement accounts.

The next step was to figure out how to open up the checkbook IRA and transfer my ROTH IRA into the account. I researched and found several custodians. The fees to open the account varied from around $300 to $3K. The custodians at the higher end open the LLC and checking account, write the operating agreement and other services. I wanted to go to the lower end but I wasn’t quite sure how to set everything up. That’s when I stumbled upon a site run by someone named Depriest. I am calling myself DepreistLite. His site helped out a ton. I am no expert and neither is he, however his knowledge and experience far surpassed my own. After I discovered Depriest and opened the self-directed ROTH, his site was taken down. Currently, It’s only available through the WayBack Machine. Here is the link to it.

DISCLAIMER: If you are looking for professional advice contact an attorney, tax advisor or a CPA. I am not an expert, so keep in mind that this is not financial advice.