LLCs were designed to be easy. Easy to understand and easy to run.
Definition and Structure
A Limited Liability Company (LLC) is state sanctioned structure whereby the proprietor (or partners) can operate a business and not be “personally” liable for the actions or debts of the company.
Owners of an LLC are called members. Most states do not restrict ownership, and so members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members.
Most states also permit “single-member” LLCs, those having only one owner. This is the case with the LLCs set up by Safeguard Advisors. The only member is your IRA account. And, as with all single-member LLCs, there are no tax filings.
All states have slightly different regulations and costs related to the set up and maintenance of an LLC, but the fundamentals of operation are basically the same.
Formation and Operations
The LLC is formed by filing Articles of Organization with the state in which the LLC is to be operated and is governed by the laws of that state.
The Operating Agreement defines each Member or Manager’s rights, powers and entitlements. It is an agreement set by the company members that contains provisions for critical items and rules that run the company.
Standard LLC Operating Agreements are not adequate for the oversight of a Self Directed IRA plan. And IRA LLC Operating Agreement must have special provisions included that address provisions of the IRC 408 and 4975 and the fact that the LLC will not be managed by the Member (the IRA account).
You’re In Control
When the IRA is moved inside the LLC, it is afforded limited liability protections and authorizes the Manager (generally the IRA account holder) to set up a checking account that will be utilized for making investments. With the checking account, the Manager of the LLC can enter into contracts and agreements on behalf of the LLC.
The IRA LLC, when properly structured, is simply the most flexible and powerful wealth building tools available for investing with retirement funds.