Immediate Access to Funds

Many investment types require a quick reaction time. When opportunity knocks, you need to be able to act by signing a contract and putting down a deposit. If you are participating in tax lien or foreclosure auctions, you need to pay that day if you are the successful bidder. There are also times where maintaining an asset can require quick access to funds, such as emergency repairs for a rental property.

Because the IRA capital is held in a bank account of your choosing, you have the ability to react to opportunity or emergency immediately. You can simply write a check or wire funds as needed, without any need for 3^rd party review or processing.

While it is possible to invest in certain non-traditional assets directly from an account held by a 3^rd party IRA custodian, there are fees that go along with having that institution process all of your investment transactions. Depending on the custodian, fees can be based on the account value, number of assets, per-transaction for check issuances, or some combination of these factors.

With the IRA LLC model, the IRA makes only one investment, the initial purchase of the LLC. All investment transactions will take place from within the LLC, using the bank account you have established. There are no IRA associated fees when you buy an asset, pay for expenses related to LLC investments, or receive income produced by those investments.

While an IRA LLC structure will cost more to implement than simply opening an account with a custodian, most investors with a diverse portfolio will find that over time, they can save a considerable amount by using the checkbook IRA model.

With any self-directed IRA portfolio, you are likely to have two types of potentially idle capital: contingency reserves and new income from investments. Because you have full control over your plan, and the ability to invest in absolutely anything the IRS rules allow, you can easily keep all of the capital in your IRA LLC deployed rather than leave these funds in cash.

You can keep things simple and just have a savings account for the LLC, or perhaps put some portion of the LLC funds in short-term CD’s. When it comes to contingency funds, something that is reasonably safe and easy to liquidate is best.

If you want to get more sophisticated, you can open a brokerage trading account in the name of the LLC, then take the rental income from an IRA-owned property and invest that into shares of your favorite stock or mutual fund. If you have both bank and brokerage accounts within the IRA LLC, you can simply move funds between these accounts without need for special processing or reporting.

Most custodian managed self-directed IRA plans cannot provide this kind of flexibility, or have rather cumbersome and expensive methodologies for keeping idle capital deployed in conventional financial products.