PARTNERING

When a retirement account partners with others (individuals, companies, or other retirement accounts) for an investment, the process of running that partnership can be much more efficient when using a manager-managed LLC. With pass-through taxation, a retirement account can make its investments completely tax-deferred or tax-free rather than having its return on investment lowered by the tax on C Corporations. Additionally, an LLC has much more management flexibility and simpler recordkeeping than a C Corporation.

CHECKBOOK CONTROL

Many IRA owners would prefer to have their transactions handled on the LLC level rather than to have to direct their IRA custodian to make their investments for them.

1. Unlimited Choices - Although a tailored IRA custodian will allow many non-traditional investments, most disallow a few types of completely legal investments within their own company policies. With the checkbook control of a special purpose IRA LLC, you can take advantage of all legal investments.
2. Lower fees - Some tailored custodian fee schedules are difficult to understand and can result in fees of several thousand dollars per year.
3. No waiting – The time it takes for a custodian to follow through with your investment direction can be anywhere from 48 hours to over 30 days. For some investment strategies (for example, buying real property at auction) waiting for a contract to be signed or for a check to be issued is not an option.

***IMPORTANT NOTICE***
When transactions occur at the LLC level without custodial oversight, it is your responsibility to avoid a prohibited transaction. It is highly recommended that you involve a professional, such as a CPA or attorney, to oversee and approve your transactions prior to execution. To search for professionals who specialize in Unlimited™ Retirement Account investing, see www.iraaa.org.

ASSET PROTECTION

CASE #1 – Without LLC
Your IRA uses half of its monies to directly purchase a rental property, while the other half is invested into mutual funds. Somebody hurts themselves on the IRA owned property and sues the owner (the IRA). The plaintiff wins, and the award goes beyond property insurance coverage. Your mutual fund portfolio must be liquidated in order to pay damages to the plaintiff.

CASE #2 – With LLC
Your IRA uses half its monies to directly invest into a special purpose LLC, while the other half is invested into mutual funds. The special purpose LLC purchases a rental property. Somebody hurts themselves on the LLC owned property and sues the owner (the LLC). The plaintiff wins, and the award goes beyond property insurance coverage. Your mutual fund portfolio is not subjected to being liquidated in connection with the law suit.

CASE #3 – One LLC, many assets
Your IRA uses some of its monies to directly invest into a special purpose LLC. The LLC purchases five rental properties: Property A, Property B, Property C, Property D, and Property E. Somebody hurts themselves on Property A and sues the owner (the LLC). The plaintiff wins, and the award goes beyond the property insurance coverage. Some or all of the LLC’s assets (including Property B, C, D, & E) are subjected to being awarded to the plaintiff to pay damages.

Case #4 – Five LLCs, one asset in each
Your IRA uses some of its monies to directly invest into five separate special purpose LLCs. The LLCs purchase one rental property each: Property A LLC, Property B LLC, Property C LLC, Property D LLC, and Property E LLC. Somebody hurts themselves on Property A and sues the owner (Property A LLC). The plaintiff wins, and the award goes beyond the property insurance coverage. The assets of Property A LLC are subject to satisfying the award to the plaintiff to pay damages, but the other four LLCs are not subjected to such liability.