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Checkbook Control In A Self-Directed IRA

February 10, 2020

With great power comes great responsibility. Having checkbook control has benefits, but if managed incorrectly, it may have great consequences.

Checkbook Control is an IRA owned LLC. As the name insists Checkbook Control gives you just that –direct checkbook authority for your account. Contrary to what many people believe, just because you have checkbook control doesn’t mean that you are exempt from IRS rules. When adopting checkbook control your IRA is still ineligible to purchase life insurance, purchase collectibles, and deal with disqualified individuals.

When adopting checkbook control, there are six steps that will establish control.

Step One- Establish a self-directed IRA account with NuView.

Step Two- Transfer retirement funds from your current custodian to your new self-directed account. This transfer is tax-free unless you’re moving pre-taxed money into a Roth IRA. If you’re moving funds between traditional IRAs then it’s a tax-free transfer with no liability associated with the transfer.

Step Three– LLC is formed with the IRA account owner designated as the non-member manager and the IRA as the owner (member) of the LLC. A bank account is established in the name of the LLC.

Step Four- Complete Authorization form (NuView Form), acknowledgment letter (NuView Form), and operating agreement (third party form).

Step Five- Within 48 hours of the completion and submission of these forms, NuView will send the funds to the LLC bank account. NuView will not keep track of the assets, as this is the job of the LLC manager.

Step Six– The manager assumes all responsibility to keep track of ALL activity pertaining to the LLC. If the manager is unable to do so then a third-party should be appointed to the position.

It’s cost-effective to have the LLC model if you’re purchasing multiple assets. The responsibilities that NuView has in a custodial account are much higher than the responsibilities that NuView has in an LLC Custodial Account. You will ultimately save money by taking on an LLC account, but you will have more responsibility.

Think of mowing your lawn – it’s cheaper to mow your lawn, but it’s hassle-free knowing that you’ve paid someone to take care of your lawn and you can use that valued time elsewhere. If you’re equipped and aware of the responsibility, checkbook control can be cost-efficient, but remember with great power comes great responsibility. *NuView does not establish LLC’s to do so you would have to establish an LLC with another party such as your licensed attorney or