Originally posted by @Sandy Sawyer:
Please forgive me it this ground has already been covered, but I've read that I can use the money in my (and husband's) ROTH IRA to fund investments, but better to put them in an LLC that I can manage the checkbook. Is this still a viable option? I was at the Houston REIA last night talking with a girl from Quest and she told me that's a prohibited transaction, for me to personally manage the LLC, that the custodian would have to do that. Any suggestions? I also don't want to bleed out in fees.
Hi Sandy,
Welcome to BP.
It may be terminology and how used that could be causing confusion.
I rolled my traditional ROTH I had with an all-fund company into one that allows for RE investments. I am with Midland IRA who currently is now also the custodian of the account so they do that and the administration of it.
I invest in Notes and do not have what is called "checkbook" control. All companies do not offer this option and those that do, give this ability to the owner of the account so they can write checks against the IRA/ROTH money. But you need to be careful what you are doing in writing these checks out and to whom. I've found that I don't really want it or need to do this since Midland IRA is very receptive to my RE investment requests when I need money sent to the parties for which I am purchasing Notes. They are very expedient and so far have turned around the money going out within 24 hours, if not less time.
Regarding the LLC, that would need to be answered by someone more versed in using and LLC with a self-directed IRA/ROTH. I know some people have one set up and tied or linked to the SDIRA somehow. My account is in my name and all transactions are FBO (for the benefit of) when I sign any paperwork. It's FBO my account that is in my name. I would assume that somehow with the LLC in play, the transactions are written in a way that the LLC name is the "benefit of".
If you call around to some other SDRIA companies they can explain their fees and what this all means regarding what they allow in their business practices.
Because Quest also mentioned "prohibited transaction", I would think she would have explained what she meant a little more to make it clear to you for your intentions of use and why it would be prohibited. To touch a little on that subject, I recently asked a question since I am looking at lending my money to other investors for their projects (ie flipping, rehabbing). I wanted to partner up with someone to purchase a property so it would be 50/50 (he pays cash and I pay cash to purchase), then I wanted to "loan" the money I have in my SDIRA to the LLC we would have set up to do the flip. I'll stop there because that is considered a "prohibited transaction". I cannot personally be part of a venture having money in (cash or some other form of $) and then utilize my own SDIRA to also participate in the project. Hope that makes sense and is only one example and is from my own personal experience....
Good Luck...
