Why Self-Directed Solo 401k instead of IRA LLC
Why should you open self-directed solo 401k instead of IRA LLC with checkbook control?
It's quite simple, really. For one, Self-Directed Solo 401k comes with checkbook control when you open solo 401k through a Solo 401k provider whose plan documents allow for investing in alternative investments such as real estate. Second, if a 100% owned IRA/LLC is not formed correctly or the LLC operating agreement does not contain the pertinent language applicable to the IRA and IRS regulations, the IRA owner, who is typically named as the manager, may mistakenly engage in a prohibited transaction because he or she is operating the LLC based on the incorrect language outlined in the LLC operating agreement.
Next, a self-directed 401k is more advantageous than IRA LLC because in order to gain checkbook control over your retirement funds you don't need a custodian or LLC. Reason being, the Solo 401k rules permit the business owner to serve as trustee over his or her retirement funds, with the exception of cash, which like the IRA LLC, must be held in a depository institution.
Here is link and language direct from the IRS website that allows the Solo 401k business owner to serve in trustee capacity over his or her Solo 401k plan.
"Trusts and trustees. 401(k) plans are funded through a trust established to hold and invest the plan’s assets. At least one trustee is appointed to have responsibility for the activities of the trust and its assets. This is a serious responsibility with considerable potential for liability. Trustees might include the business owner, an employee, or a financial or trust institution."