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Taking Distributions from Your Checkbook IRA

The process of removing funds from your Checkbook IRA is referred to as a distribution, and must be processed via the IRA account held by IRA Services Trust Co.

Distributions may take place for purposes of:

A distribution to the IRA account holder

    • This is a taxable event in a tax-deferred IRA such as a Traditional, SEP, or SIMPLE
    • This is a non-taxable event if a qualified Roth IRA distribution

A distribution for transfer or rollover to another qualified retirement plan

    • This is a non-taxable event

Distributions require a two-step process:

  1. Liquidation of funds from the LLC/Trust entity back to the IRA account at IRA Services Trust Co.
  2. Issuance of the distribution from the IRA to the account holder or alternate plan.

IMPORTANT NOTES:

Under no circumstances should you transfer funds directly from your LLC/Trust bank account directly to yourself or another retirement plan.  This will break the chain or reporting and could result in adverse tax consequences.

If your IRA-owned LLC is a partnership between more than one IRA account each partner will need to liquidate funds out of the LLC in the same proportion as initial funding.  The equity participation in the LLC may not be altered.

Processing Forms

Several forms are linked from this document. They are also available on the IRA Services web site at:

https://www.iraservices.com/forms

From time to time, IRA Services Trust Co. updates forms and that may end up in the form URL being changed.  If you experience a broken link in this support article, refer to the above Forms site for the current document.

Delivery instructions are included in the last page footer of all IRA Services Trust Co. forms.

Samples of relevant forms are included at the end of this document.

Step 1: Liquidation of Cash from LLC to IRA:

Issue a check from the LLC to IRA Services Trust Co.  Include your name and/or IRA account# in the memo

Mail the check with a Deposit Notification form to IRA Services Trust Co (address at the bottom of the form)

Indicate this is a Partial Liquidation of the LLC using section 2,7

This transaction may also be executed by wire, with the Deposit Notification form submitted electronically via fax/email/DocuSign.

Step 2: Distribution from the IRA

Option A – To Account Holder

Fill out a Distribution Request form and include in the same envelope as the check and deposit

– Or –

Submit the Distribution Request electronically via fax/email/DocuSign once funds have been deposited to the IRA via mailed check or wire.

Option B – To Another IRA

Once funds have deposited and cleared in the IRA Services Trust Co. IRA account, contact your receiving IRA custodian and complete their “Inbound Transfer Request” form.  Such IRA-to-IRA transfers are always a “pull” from the receiving institution.

A copy of your IRA Services Trust Co. IRA statement will need to accompany any such transfer request form.

Option C – To an Employer Plan such as a 401(k)

Once funds have deposited and cleared in the IRA Services Trust Co. IRA account, contact your receiving plan administrator and request rollover instructions and/or a letter of acceptance.  They will guide you as to the appropriate process for their institution.

Timelines

Overall timelines vary, but you should allow approximately 2-3 weeks for end-to-end processing.  Some steps may be expedited at additional cost.  Use of wire transactions will speed up processing.

Fees

The following fees may apply.  Check the current IRA Services Fee Schedule for accurate pricing.

The cost to liquidate LLC/Trust membership interest is $40.00. (Sale of a Type 4 asset per their fee schedule).

There is no cost through IRA Services Trust Company associated with adding funds to your IRA account via check.  There is a $15 inbound wire fee.

Issuance of funds to you or another institution will cost $10 by check or $25 for outbound wire.

Note that your IRA account must maintain a minimum cash balance of $500.00. If your account is below this amount, a portion of the deposited funds will be retained in the cash account to restore this balance to $500.00.   Fees for the processing will also be deducted prior to funds being distributed.  Be sure to liquidate enough cash from the LLC/Trust to account for these fees and minimum cash requirement.

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