Just as there are different types of individual retirement accounts, there also are different structures for your IRA. One that is especially beneficial to real estate investors is a checkbook IRA.

So which one is best? The answer to that question is not black-and-white.

Depending on your investing strategy and long-term goals, a Custodial Self-Directed IRA may be the logical choice for you. Under this structure, only the IRA Custodian can write checks and pay bills from that account.

What’s the Advantage of a Checkbook IRA?

Are you one of the growing numbers of investors who want to definitively call the shots? (It IS your own money, after all.) Or do you need quick access to those funds? If so, the better option may be the IRA-LLC Self-Directed IRA. That is also commonly known as a “checkbook IRA.”

This is particularly useful to people investing in real estate, because you often need to act quickly on a deal or lose out entirely on the opportunity. With a checkbook IRA, it really is that simple: you write a check for your investment funds when you need them.

How does it work?

You probably already have an IRA or 401(k) account. It may have been established with a previous employer, for example, and you want to “roll it over” into a self-directed individual retirement account with checkbook control.

A rollover specialist can help you maneuver through the process, which involves moving your funds to a self-directed IRA Custodian and establishing a limited liability company (LLC) that will be wholly owned by your IRA. You can think of it this way: your IRA is the sole investor in this new company and you are the LLC’s manager. Next you open a small business checking account for the LLC and your self-directed IRA will fund the account.

Here’s the advantage

The advantage comes when you find an investment you want to act on quickly. Now you can, without delay and without incurring unnecessary check-writing-and-processing fees.

Be sure to do your due diligence to ensure that a checkbook IRA is right for you. Once you have done that, with the counsel of your own tax advisor or attorney, we will be glad to help.

We can help

Investment Resource of AZ, LLC is your Arizona rollover specialist. Our team has successfully rolled over millions of dollars in IRA funds for clients, educating them, streamlining the process and supervising each step of the way for them. Call us at 602-885-6122 or email evelyn@azirarealestate.com.


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