Setting Up Your SDIRA-LLC

By Georgetown Trust


For any number of reasons, you might be interested in transferring your traditional individual retirement account into an offshore self-directed IRA, called an SDIRA. Your SDIRA must be run by a flexible custodian of your choosing who acts in accordance with your wishes and handles administration and management of the assets.

However, those who want full control over the assets held within their IRA would want to go one step further and establish an SDIRA/LLC. In essence, this allows you to invest and direct the assets of the SDIRA according to your own changing wishes and needs, and it eliminates the role of an additional custodian altogether.

You will have absolute control over your retirement account, but you will also have absolute responsibility. To establish your SDIRA/LLC, here are the steps you'll need to follow in order to get started.

Decide Where to Establish Your SDIRA/LLC

One of the first steps in the creation of an SDIRA/LLC is deciding where the company should be located or headquartered. Typically, investors opt for an offshore location with strong privacy, solid asset protection, limited intervention and zero tax rates.

Nevis is a particularly popular spot for those who appreciate a zero percent capital gains tax on foreign investments.  As well, a Nevis LLC is considered a disregarded entity by the IRS typically eliminating the requirement to notify the IRS that the entity should be disregarded.

Establish an LLC in Your SDIRA's Name

Once your SDIRA is established, it needs to have somewhere to go. For that reason, it is imperative that you set up your offshore LLC as soon as possible. Creating an offshore LLC can take some time, so the sooner you get the ball rolling, the better.

Your LLC should not be established in your name, as that may cause complications in the future. Instead, the member (think owner) should be your SDIRA to meet mandated requirements.

If this is a new area for you, and you want to ensure that you follow self-directed IRA laws and guidelines set by the IRS, then working with a trusted advisor like Georgetown Trust can be a savvy move.

Transfer Funds From Existing IRA Into an SDIRA/LLC

Once you have established a legal entity that can serve as your SDIRA/LLC, you can begin to transfer over funds or assets from your existing traditional IRA to your new IRA custodian.

There are several ways to accomplish this, one of which is simply filling out a transfer form and giving it to your existing IRA's custodian. That will direct them to transfer funds to your new custodian who will then fund the SDIRA/LLC.

Alternatively, you can fill out a direct rollover certification form that takes just some of your existing IRA's assets and sends them along to the new custodian. In both cases it’s easiest to liquidate the assets so that cash is transferred from the old to new custodian.

Determine What Investments Are Best for Your SDIRA/LLC

Once the assets from your old IRA are firmly in place in your new SDIRA/LLC, it will be time to make the investments you choose that can help you prepare for a financially secure retirement. This is where, as the manager of your SDIRA/LLC you have complete control over determining what investments you want to purchase. 

Keep in mind that not all types of investments are allowed in an SDIRA/LLC. You can't purchase real estate for you or your “hereditary family” to use, for example, and you can't invest in things like antiques, collectible items or coins, even if they are very valuable. But if you want to buy a condo in Belize and rent it out to generate income, have at it!

Anyone who wants to have greater control over their assets, and their future may want to trade a typical custodian and a traditional IRA for a new cooperative custodian and a self-directed IRA/LLC. Following the steps listed above can put you on the right track toward your own successful SDIRA/LLC.

Find out more about how to set up your SDIRA/LLLC.




Topics: Self-directed IRA