Self Directed IRA friendly banks

27 Replies

This might be a dumb question, but I am having a difficult time opening a checking account for my self directed IRA.

My custodian advised me to set up a bank account with my SDIRA as the Member (owner) and myself as the Manager and signer. I did exactly this, and have taken the paperwork to a few local branches of national banks....and they are super confused and send me away.

Any thoughts or suggestions?

Updated 7 months ago

Just to add more detail based on questions/replies: I have indeed opened an LLC, which is owned by the IRA. I am trying to open the checking account for the LLC, and that is where I am running into issues. They are not understanding that the IRA is the owner, not me personally.

First suggestion is to get another custodian.  All that should be done by the custodian.  If you take possession of the funds improperly, it will be a taxable event.  Who is the custodian?

Originally posted by @Jeff Greenberg :

First suggestion is to get another custodian.  All that should be done by the custodian.  If you take possession of the funds improperly, it will be a taxable event.  Who is the custodian?

 Yikes. I don't want to call them out publicly if I am misunderstanding something. Will shoot you a DM.

I don't believe the custodian can open the bank account, you have to do it.       try TD Bank if they are in your area, I think they are more educated and more open to things other banks consider "unusual".   

I am opening a new acct with UDirectIRA to have check writing privileges I will establish an LLC from the LLC I will be the manager. I was instructed to open a business acct with the LLC from a local bank. Should there be any issues?

Thanks!

@Dan Franks

Do you simply have an IRA account with a trust company as custodian, or have you established an IRA owned LLC?

Only the latter model will allow for a separate bank account.  

The firm that did the LLC work should assist you and make this piece of the process very simple. If they have not or cannot, then it would be entirely appropriate for you to call them out as a shoddy provider for others to avoid.

If you do not have a LLC and are trying to open a bank account, then you are very lost and should speak with a licensed professional.

@Carol Bloom

The LLC should be able to open a checking account with the bank or credit union of your choosing. As I noted above, your provider (UDirect in your case) should make this very easy for you. Give them a call if you need help.

Originally posted by @Brian Eastman :

@Dan Franks

Do you simply have an IRA account with a trust company as custodian, or have you established an IRA owned LLC?

Only the latter model will allow for a separate bank account.  

The firm that did the LLC work should assist you and make this piece of the process very simple. If they have not or cannot, then it would be entirely appropriate for you to call them out as a shoddy provider for others to avoid.

If you do not have a LLC and are trying to open a bank account, then you are very lost and should speak with a licensed professional.

 Thanks Brian.

I did indeed open an IRA owned LLC. The firm that did the setup provided me the paperwork, and told me that was all i would need to take into a bank.

Dan,

you can't have a checking account for an IRA, this is custodian's role - have custody of your funds and IRA assets. Perhaps you are referring to checking account for IRA owned LLC (aka Checkbook IRA)? Are you trying to open bank account for the LLC that your IRA owns?

Originally posted by @Dmitriy Fomichenko :

Dan,

you can't have a checking account for an IRA, this is custodian's role - have custody of your funds and IRA assets. Perhaps you are referring to checking account for IRA owned LLC (aka Checkbook IRA)? Are you trying to open bank account for the LLC that your IRA owns?

Yes, I have an LLC owned by the IRA. Trying to open the account in the name of the LLC, but the banks are not understanding.

Dan, you should be able to open business checking account for your LLC at any bank. The reason you are hitting the wall is probably because you are giving them too much information. I will send you a PM with guidance and you should be able to open the account in no time.

Thank you @ Brian Eastman for your reply! 

@Dan Franks

It is simple-do t mentionthe IRA. You are the manager of the Llc I presume. Don't confuse the bank with the facts. Tell them you are the manager of the Llc and they will open it. Don't mention the IRA or 401k when you are talking to them. Your attorney that setup the LLC should be able to help as well.

@Dmitriy Fomichenko  and @Carl Fischer (hi Carl good meeting you in Oakland) nailed it. You are giving them to much info. As long as you have the articles of formation and an EIN number you should be able to open a bank account. Don't mention the IRA part.

@Dan Franks , I have a Self Directed Solo 401(k) and had the same issue finding a bank that offered this account. Check out solerabank.com. They have amazing customer service. REALLY on the ball.

Also, if a SD solo 401(k) is an option, I think it's a better choice.

@Dan Franks

Problems setting up the bank account are more rare with an IRA LLC, because the bank should be pretty familiar with LLCs. Solo 401k trusts tend to confuse bankers more, but I agree, @Kreighton Reed has a solution either way.

I also recommend checking out the Solo 401k if you have not yet ruled out your eligibility.

I am also having this problem. I have tried to open an account for my LLC at 3 or 4 banks and they all ask "what type of business is this for?" and when I say anything about "IRA" they refuse to open the account. I am not sure how else to answer this question. My situation is exacerbated by the fact that I (in my ignorance of this issue) used the word "IRA" in the name of my LLC. I will check out Solera Bank, but are there any other ideas how I can get past this?

Thanks in advance!

@Ryan Evans

If "IRA" was not in the LLC name, you could try again with other banks and say it is an LLC for real estate investment. The best bet at this point, however, is using Solera Bank. @Kreighton Reed  will be able to set you up with an account that offers better features and/or lower fees than other banks anyway.

@Ryan Evans

Opening a checking account for the IRA LLC is something you should be able to do anywhere. It is plainly a LLC account.

When we work with new clients, we guide them to approach the bank as "I need an account for a LLC". There is no need to hide the IRA and the bank will see that at some point, but you do not want to start there as that will confuse the banker.

The bank is not dealing with the IRA. The IRA is held and reported on by whoever your custodian is. The bank's client is the LLC, and LLCs can be owned by individuals, trusts, other corporations, IRA accounts, etc.

Your LLC provider should be able to help you with this and/or speak with your banker.

That said, Solera is knowledgeable on this topic and makes the setup a slam dunk.  Their services and fees are quite appealing as well.

I am ready to open a self-directed IRA but I don't think I need a checkbook IRA at this point. Is that something that I can convert to in the future if need be or is it now or never? Thanks.

@Mark Zarragoitia

You can add an LLC to the IRA to pick up checkbook control down the road as long as your chosen IRA custodian allows for it. If you are self-employed, a Solo 401k might work better for you and the checkbook control is built in without the need for an LLC. Otherwise, the self-directed IRA (or IRA LLC) is a great way to invest retirement funds into real estate and other alternative assets.

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