The Self-Directed Roth IRA LLC

February 1st, 2012

The Self-Directed Roth IRA LLC structure was affirmed in the Tax Court case Swanson v. Commissioner , 106 T.C. 76 (1996), and further confirmed by the IRS in Field Service Advisory (FSA) 200128011 (April 6, 2001) .

The Self-Directed Roth IRA LLC “Checkbook Control” Structure has been in use for over 30 years. The notion of using an entity owned by an IRA to make an investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in holding against the IRS, ruled that the capitalization of a new entity by an IRA for making IRA related investments was a permitted transaction and not prohibited pursuant to Code Section 4975. The Swanson Case was later affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011.

In FSA 200128011, the IRS, in providing guidance to IRS agents for purposes of conducting audits, confirmed the Tax Court’s holding in Swanson and held that a newly established entity owned by an IRA and managed by the IRA owner is permitted to make investments using IRA funds without violating the prohibited transaction rules under Internal Revenue Code Section 4975.

A Self-Directed Roth IRA LLC offers one the ability to use his or her retirement funds to make almost any type of investment on their own without requiring the consent of any custodian or person. Tired of being forced to invest in stocks or mutual funds? Have an investment opportunity, such as real estate or a business investment that you would love to make with your IRA funds? Then the Self-Directed Roth IRA LLC is your solution.

In addition to the tremendous Roth IRA benefits (tax-free profits, asset protection and estate planning), the Self-Directed Roth IRA LLC allows you to invest tax-free in investments that you know and understand. Aside from life insurance, collectibles and certain “prohibited transaction” investments outlined in Internal Revenue Code Section 4975, a Self-Directed Roth IRAs can invest in most commonly made investments, including real estate, private business entities, public stocks, private stocks, and commercial paper.

The Self-Directed Roth IRA LLC, allows the IRA holder to:

  • Purchasing a vacation home in or outside of the United States with Roth IRA funds and moving in tax-free at age 591/2
  • Purchasing a retirement home in or outside of the United States with Roth IRA funds and moving in tax-free at age 591/2
  • Purchasing an office building with Roth IRA funds and then using the building for your own business after you turn 591/2
  • Purchasing a rental property which generates rental income and gaining use of those funds tax-free
  • Investing in precious metals and then taking possession of the metals once you reach the age of 591/2
  • Investing in tax deeds and then taking possession of the property personally once you reach the age of 591/2
  • Investing in a distressed property – generating large gains and then withdrawing the funds tax-free for personal use upon reaching the age of 591/2
  • Investing in an investment fund – generating large gains and then withdrawing the funds tax-free for personal use upon reaching the age of 591/2