Maintaining IRA Minimum Cash Balance

Your self directed IRA account is held and reported on by an IRA custodian separate from Safeguard Advisors. The IRA will typically hold two assets: the LLC created by Safeguard Advisors that provides you with checkbook control to invest, and a cash account.

Safeguard Advisors works with multiple custodians, and the specific forms and processes vary slightly depending on which firm is holding your account.

Fees for services provided by the custodian may be automatically debited from the cash portion of the account. As such, the custodian requires that you maintain a minimum balance in the cash account as a means to ensure they can effectively administer the account over time.  You need to pay attention to this balance (which is noted on your IRA statement), and add funds to retain the minimum from time to time.

If you are regularly making new IRA contributions or taking IRA distributions, funds will be held back from these transactions to replenish the cash account and no special action is required. This is also true if you are performing transfers from/to another retirement plan.

If you are not actively adding or removing funds from the IRA LLC structure via contribution, distribution or plan-to-plan transfer, then you need to add funds using one of the following methods:

1 – Reimburse IRA for Current Year Fees

This is our preferred method as there is no processing fee for this transaction.  We recommend you make a habit of doing this each December to keep the administration of your IRA simple.

While the cash balance must be IRA funds, IRS rules allow you to reimburse your IRA for administrative expenses incurred in the current tax year.

Your IRA statement will indicate the total of fees for the current year, or you can contact your custodian’s customer support team for this information.

To reimburse the IRA for fees, send a check along with a the appropriate deposit form.  Be sure to note the deposit is for the purpose of IRA fees.

If you have not replenished the IRA recently, and need to add more funds than were charged in fees during the current year, you may also need to make an IRA contribution or liquidate cash from your LLC.

Fees to maintain your IRA may be deductible on your personal tax return.

2 – Liquidate Cash from your LLC

Another means you can use is to send cash from your IRA owned LLC back to the IRA account.  Because this transaction involves the reporting of the sale of interest in the LLC, a processing fee may apply.

Send a check from the LLC bank account along with a the appropriate deposit form.  Be sure to note the deposit is a partial liquidation of the LLC asset.