Self Directed IRA friendly banks

Rental Property Investor · Prosper, TX · Member since 2008 · 51 posts · 6 votes

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?

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Mindy JensenPro Member

BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

@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.

[email protected]Podcast Guest on Show #261

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Jeff Greenberg
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
8y
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?
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Dan Franks
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Rental Property Investor · Prosper, TX · Member since 2008 · 51 posts · 6 votes
8y
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.
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Eric E.
Residential Investor · Allentown, PA · Member since 2012 · 95 posts · 29 votes
8y
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".
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Carol Bloom
Scottsdale, AZ · Member since 2017 · 95 posts · 24 votes
8y
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!
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Brian EastmanPro Member
Self Directed IRA & 401k Advisor · Wenatchee, WA · Member since 2014 · 2k+ posts · 2k+ votes
8y
@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.
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Brian EastmanPro Member
Self Directed IRA & 401k Advisor · Wenatchee, WA · Member since 2014 · 2k+ posts · 2k+ votes
8y
@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.
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Dan Franks
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Rental Property Investor · Prosper, TX · Member since 2008 · 51 posts · 6 votes
8y
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.
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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
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?
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Dan Franks
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Rental Property Investor · Prosper, TX · Member since 2008 · 51 posts · 6 votes
8y
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.
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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
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.
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Carol Bloom
Scottsdale, AZ · Member since 2017 · 95 posts · 24 votes
8y
Thank you @ Brian Eastman for your reply!
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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
Dan, it looks that you are self-employed. Have you considered truly self-directed Solo 401k plan (it is way superior to SD IRA if you quality)?
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Carl FischerPro Member
Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
8y
@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.
[email protected]215-283-2868
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Jeff Greenberg
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
8y
@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.
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Eric E.
Residential Investor · Allentown, PA · Member since 2012 · 95 posts · 29 votes
8y
good point @Dmitriy Fomichenko and @Carl Fischer :-)
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
8y
@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.
[email protected]Podcast Guest on Show #261
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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
Speaking of Solera Bank, @Kreighton Reed would be the contact person.
1 Reply
Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@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.
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Ryan Evans
Atlanta, GA · Member since 2018 · 1 post · 0 votes
8y
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!
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Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@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.
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Brian EastmanPro Member
Self Directed IRA & 401k Advisor · Wenatchee, WA · Member since 2014 · 2k+ posts · 2k+ votes
8y
@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.
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Mark ZarragoitiaPro Member
Rental Property Investor · Houston, TX · Member since 2018 · 15 posts · 10 votes
8y
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.
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Justin WindhamPro Member
Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
8y
@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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Mark ZarragoitiaPro Member
Rental Property Investor · Houston, TX · Member since 2018 · 15 posts · 10 votes
8y
@Justin Windham Thank you.
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George Blower
Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
8y
@Ryan Evans
The company that assisted you with the IRA LLC setup should get involved too. For my clients, we speak with the banker if they have questions and they open it once they understand that it is simply a business bank account.
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