IRA/LLC or Checkbook IRA

[Christopher Ajayi]

I am interested in knowing what members (investors) think about "IRA/LLC or Checkbook IRA" and the best institutions in the business they have dealt with in the past. Much of the information out there are from the institutions offering the service and not from investors. I would like to know the advantages and disadvantages of this method of investing in real estate from the investor view points. Thank you.

[Mike S.]

If you are rolling over funds from your 401k, I would highly suggest to use a QRP like a solo 401k instead. Not only it is cheaper to maintain than a self directed checkbook IRA, but most importantly, if you want to invest in leveraged opportunities (like syndication), you won't have to pay UDFI taxes. Another advantage of the solo 401k is that it allows to borrow money out of the account.

The only reasons I would use a self directed IRA instead of a QRP type are:

• to roll-over money from a ROTH IRA (as it can not be rolled over to ROTH 401k).
• to avoid required minimum distribution in a ROTH plan when in retirement phase.

In my case I have both as I had some ROTH IRA I wanted to use. But now I am only contributing to the solo 401k.