Self Directed Checkbook IRA: Understanding the Process

Step 1: Establish a Self-Directed Checkbook IRA

Sense Financial will handle the complete process of setting-up your Self-Directed IRA LLC. The entire process may be done via email, telephone, regular mail or fax and normally can be completed in 3-4 weeks.  The set-up time mainly depends on the state where LLC is formed and on the speed of your current custodian to process the transfer of funds. Our experienced team have many years of experience and will help you significantly reduce the cost and set-up time.

Checkbook IRA Process

Step 2: Tax-free Transfer of Your Retirement Funds

Our experienced team will help you transfer your retirement account from your existing custodian without any tax consequences to a new IRS approved Passive Custodian.  Custodians that we work with allow for truly Self Directed Checkbook IRA investment opportunities such as tax deed, real estate, hard money loans, precious metals, mortgage notes and much more.

Passive Custodian: What Does It Mean?
IRS approved custodian in a Self Directed Checkbook IRA configuration are known as a “passive” custodian.  The reason is mainly because they won’t have to review and provide approval to the investments of the IRA LLC.  They will simply serve the passive role to satisfy IRS rules. This form is constructed around the creating and maintaining of IRAs, while conventional custodian of an IRA produces profits by advertising and sales of investments.

Key Fact
Every custodian we partner with is insured by the FDIC and approved by the IRS. After your existing custodian has moved your money to the passive custodian, then they will, in turn, move your IRA money to the newly established IRA owned LLC.  This allows you to obtain “Checkbook control” of your retirement funds as the manager of the LLC.

With Checkbook IRA, you now don’t have to spend money for custodian fees determined by the value of your account, number of transactions you conduct, or number of investments you hold in your account. As an alternative, with Checkbook IRA, IRS approved custodian is playing a “passive” role. When utilizing an IRA owned LLC, which provides you “checkbook control”, use all benefits and features of self-directed IRA but avoid high custodian fees & the delays associated with having custodian approve your translations.

Types of IRA Account Eligible for Rollover
 Roth and Traditional IRA
 Self Employed SEP and Simple IRA
 Employer Sponsored Plans: 403(b), 401(k), 457
 Money Purchase Pension Plans
 Keoghs, ESOPs etc.

Our experienced team will help you complete all required custodian paperwork in order for your accounts to be moved to the a new custodian playing “passive” role quick and avoid tax consequences.

Step 3: Establishing Checkbook Account for IRA-owned LLC

Any financial institution of your choosing may be used to establish a bank account for your IRA LLC, including banks, credit unions or any other financial institution.

Step 4: Transfer Funds Tax-Free to LLC Checking Account

You will instruct your custodian to move the funds from your IRA to the newly established IRA owned LLC checking account.  Remember, that the IRA is the member of the LLC and you are non-member manager.

Step 5: Checkbook (Complete) Control

Manager’s title of your IRA owned LLC gives you the ability to make investment choices. Simply speaking, you retain “checkbook control” of your retirement account,  which, in turn, makes any investment as simple as check writing from your LLC checking account or directing the bank to wire the funds.

Step 6: Tax-Deferred Investment

Because your Self Directed Checkbook IRA is now considered the member (owner) of the IRA owned LLC, all gains, profits or any other income produced by investments held in the LLC would typically go into your IRA free of taxes.  As far as the taxes are concerned, the LLC is considered a pass-through entity, all gains, profits or any other income would not be taxed at the entity level, but rather at the owner’s level.  

But keep in mind, according to IRC Section 408, an IRA is considered to be tax-deferred, which means that all profits, gains, and incomes of LLC investments would run into your Self-Directed Checkbook IRA without taxes until years later!

Alternate investment options you get with a Self Directed Solo 401k:

Real Estate

Precious Metals

Private Business

Stock & Funds

Private Lending

Tax Deeds/Liens

Financial Concepts that Make Sense!

Greater Flexibility. Investment Freedom. Hassle-Free Management.

Our expert team is always ready to answer you! Give us a call at (949) 228-9394. You can email us at