The question that most people are interested in asking, but they rarely ask. What steps are typically followed with the IRA custodian when establishing your self-directed IRA LLC? Why?
Probably because they place significant trust in the self-directed company assisting with the establishment of the self-directed IRA LLC. But, since a portion of that process involves the IRA account owner’s involvement, you might as well have a good idea of what the basic steps are that will include your involvement.
The self-directed company you retain to assist you with the establishment and funding of your IRA LLC will, generally speaking, execute everything that needs to be done with this process. As I like to mention, the company assisting you should do everything they can legally, ethically and morally do in assisting you with your plan set-up. But, of course, there are certain functions during the process that a company cannot be doing for you….you have to be involved with some of these steps. These include signing the application, calling on your behalf to a financial services company to make requests on your behalf…when you are the IRA account owner! But, as you can see, these steps are common sense and you would assume as much.
Remember that the IRA LLC will give you “checkbook control” of your IRA assets with a single-member IRA that is 100% owned by the IRA plan. You, or your designee, act in the role of manager of the LLC and make investment choices on behalf of the plan. This IRA account will be established through an IRS-approved, FDIC-insured, IRA Custodian.
While we work with several custodians, they all have very similar forms that a client must complete in the application process to establish the account and fund their new IRA plan and IRA LLC. Let’s review the basic steps you will need to execute to establish your self-directed IRA custodian account.
Also, please keep in mind that the IRA custodian has the annual requirement to report the value of your IRA to the IRS each year. This is typically done for the IRA LLC through a Fair Market Valuation Form (FMV) form. The IRA custodian will send this form to the IRA LLC manager each year. As the manager, you will report the FMV to the custodian so that they can execute their responsibility. The requirements associated with this reporting will be changing effective with the 2015 year….so, be prepared for some additional responsibilities that you will have as the IRA LLC manager. It is important that you take this responsibility seriously and make a concerted effort to value the assets of the IRA LLC accurately.