IRA LLC FAQs


What is an IRA?

An individual retirement arrangement (IRA) is a custodial account used to hold investments for an individual’s retirement.


When were IRAs created?

After the passage of the Employee Retirement Income Security Act of 1974 (ERISA), IRAs were created by ERISA in 1975. Roth IRAs were created by the Taxpayer Relief Act of 1997.


Who offers IRAs?

IRAs are established with Insurance Companies, banks, credit unions, savings and loan associations, brokerage firms, or other organizations approved by the Internal Revenue Service (IRS).


What is a Self-Directed IRA?

A self-directed IRA (SDA) is an IRA that allows the IRA owner to pick the investments. Because the IRA trustee or custodian does not pick the investments, the IRA owner takes on the risk. Some of the investments that SDA owners direct their IRAs into are real estate, LLC and precious metals, to name just a few.


What is a Self-Directed IRA LLC?

Commonly referred to as a Checkbook IRA or IRA LLC, when an LLC is 100% owned by an IRA or combination of IRAs, it is referred to as a Self-Directed IRA LLC. While the IRA owns the LLC through the purchase of member units, the same prohibited transaction rules applicable to the self-directed IRA apply to the IRA owned LLC.


Why open a Self-Directed IRA LLC?

There are many reasons the self-directed IRA LLC is popular for investing retirement funds, including the following:

Alternative Investments

Since the early 2000s the self-directed IRA owned LLC has grown in popularity as the common form of entity for placing real estate purchases, tax liens, precious metals, trust deeds, promissory notes and private placements, to name a few.

Checkbook Control over the IRA

A self-directed IRA owned LLC puts the IRA participant in control in placing the self-directed investments as the named LLC manager. The LLC investments can be processed by check or wire and are titled in the name of the LLC, not in the name of the IRA.

Reduce IRA Custodian Fees and Timely Process Investments

After investing the self-directed IRA in the LLC, as the manager start placing alternative investment purchases by writing checks or wiring funds from the LLC bank account. As a result IRA custodian processing fees and holding fees are greatly reduced and hold times are eliminated.


How is a Self-Directed IRA LLC established?

First, a Self-Directed IRA is created by completing and signing the IRA plan agreement provided by the IRA custodian.

Second, the former employer retirement plan or IRA funds are transferred to the new Self-Directed IRA custodian.

Third, MySolo401k.Net drafts Self-Directed IRA LLC operating agreement including specific IRA regulatory language, registers the LLC with the state and obtains EIN for the LLC from the IRS.

Fourth, MySolo401K.Net assists the LLC manager in opening the LLC bank account at his or her local bank.

Fifth, LLC investment directive along with the LLC documents are submitted to the custodian who then invests the IRA funds in the LLC by wiring the funds to the LLC bank account.

Finally, after the LLC bank account is funded, the manager of the LLC begins placing alternative investment purchases.


How do I proceed with opening a self-directed IRA LLC?

Starting a self-directed IRA LLC is easy and we will guide you through the entire account establishment process.

Step 1: Complete the sign-up form by clicking here.

Step 2: After we review your online application, we will e-mail you to confirm receipt of your IRA LLC request.​

Step 3: After making payment, we will register the LLC with the secretary of state and obtain employer identification number for the LLC.

Step 4: We e-mail the self-directed IRA establishment forms and assist you in filling them out.

Step 5: We will assist you in filling out the IRA and/or qualified plan (e.g., former employer 401k, TSP, 403b or governmental plan) transfer-out forms.

Step 6: Mail the self-directed IRA establishment: Mail the self-directed IRA application to the new IRA custodian.

Step 7: Open the LLC bank account at your local bank.

Step 8: After the self-directed IRA has been funded, submit the IRA LLC Operating Agreement and investment forms to the new IRA custodian for funding.

Step 9: After the IRA LLC has been funded, begin placing investments by writing a check.


How long until my account IRA LLC is setup and funded?

The LLC funding process generally takes 7 to 14 business days.


Can I roll over/transfer my former employer retirement plan and/or IRAs into the IRA LLC?

Yes former employer retirement funds and/or existing IRAs may be transferred/rolled over to a self-directed IRA and subsequently invested in the IRA LLC. We will guide you through the entire transfer process.

IMPORTANT: SIMPLE IRA funds may not be transferred to an IRA LLC until two years has passed since the SIMPLE IRA was first funded. This is a SIMPLE IRA rule. See publication 590 for more on this

 

How much can I contribute to an IRA?

Fort 2013, the maximum you can contribute to all of your traditional and Roth IRAs is the smaller of: $5,000 ($6,000 if you’re age 50 or older), or your taxable compensation for the year.

Do IRA contribution limits apply to rollover contributions?

No the IRA contribution limits do not apply to transfers/rollovers from other IRAs or former employer plans such as a 401k.

Can I make IRA contributions after age 70 1/2?

It depends. You can make regular contributions to a Roth IRA after age 70 1/2, but contributions may not be made to a traditional IRA after age 70 1/2 even if you have earned income.

IMPORTANT: Transfers/Rollovers are not subject to the age 70 1/2 contribution restriction.

Can my spouse make IRA contributions even though he is not employed?

Yes, known as spousal IRA, you and your spouse can each make self-directed IRA contributions even if only one of you has earned income/taxable compensation.

I'm currently contributing to my full-time employer 401k, can I still contribute to a self-
directed IRA?

Yes.


More IRA Questions & Answers

 QUESTION: Do I still need to have a self-directed IRA custodian for the IRA LLC even if the LLC will be self-administrated? If so, which custodian(s) do you work with most often?

ANSWER:  Yes an IRA custodian is still required because they have to do the annual reporting with the IRS. For example, the IRA custodian has to issue a Form 5498 each year to report the total value of the IRA including the LLC. Many of our clients use IRA Services Trust Company because they have been in business since 1978 and their annual fee is 1$80 a year; however, you get to choose your IRA custodian.

QUESTION:  In which state will this IRA LLC be registered?

ANSWER: The LLC is registered in the state that you live in

QUESTION: Does your fee cover the LLC state registration fee?

ANSWER: No our fee does not cover the LLC registration fee.

QUESTION: Does the IRA LLC need to file an annual report and pay annual registration fee in that state?

ANSWER:  Yes the state may require an annual report and charge a fee. This depends on your state.

QUESTION: Your website says that a single member IRA LLC does not need to file tax return because it is considered disregarded entity. Do I need to include this LLC in my personal tax return?

ANSWER: No the IRA LLC activity is not reported  on your personal tax return.

QUESTION: What if the LLC generate UBTI? Do I need to file a separate tax return for the IRA LLC in that case?

ANSWER: If the IRA LLC generates UBIT or UDFI, then yes a separate tax return known as  form 990-T will need be filed with the IRS and the tax payment will need to be paid with IRA funds as this tax is assessed on the IRA.

QUESTION:

How can we roll over my Roth IRA into a self employed IRA so we have more choices than stocks and bonds?

ANSWER:

It is not possible to transfer a Roth IRA to a self-employed plan. But you can open a checkbook ROTH IRA that will allow for investing in alternative investments such as real estate. Click here to learn more.

QUESTION:

Can you send me a list of your current custodial fees?

ANSWER:

We do not act as the custodian. The vast majority of our customers are at a company called IRA Services Trust Company – please see the fee schedule located on their website. Of course, you can choose a different custodian if you prefer.

QUESTION:

I have several retirement accounts to transfer/rollover do i need to wait for all of them to be transferred before opening the LLC?

ANSWER:

You can rollover over at the same time or over a period of time.

QUESTION:

Do i need to open the LLC within a certain time after establishing the IRA?

ANSWER: No.

QUESTION:

What IRS rule covers survivor-ship, i.e. when i die does it get dissolved or can my kids keep funding it?

ANSWER:

It depends on who inherits the IRA. If the IRA is inherited by your spouse, it is treated as if it was your spouse’s IRA all along (e.g. your spouse could continue to make contributions to the account). If inherited by a nonspouse IRA, it is treated differently & the beneficiary needs to start taking distributions.

Question:

 I manage a Roth IRA LLC that you set up. I am evaluating an investment opportunity and the questionnaire is asking me to state whether the LLC qualifies as any one of the below. These look like relatively standard categories. Please let me know how I should answer these.
  • The Investor is an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Part 4 of Title I of ERISA.
  • The Investor is a “plan” as defined in Section 4975(e)(1) of the Internal Revenue Code, including, without limitation, individual retirement accounts and Keogh plans.
  • The Investor is an entity whose underlying assets include “plan assets” (as defined under Section 3(42) of ERISA) by reason of a plan’s investment in the Investor. If true, the Investor hereby certifies that _____% of the total value of equity interests in the Investor is held by “benefit plan investors” as defined in ERISA

Answer:

In this case neither of the options presented apply because it is the Roth owned LLC making the investment, not the Roth IRA.

LLC Tax Return QUESTION:

If my wife and I invest both or our respective IRAs in the same LLC will that trigger any LLC tax return filing requirement?

ANSWER:

While both IRA accounts can invest in one LLC,  this means that there will be two members of the LLC such that a partnership tax returns will have to be filed for the LLC (e.g. form 1065 with the IRS) as well as a K-1 for each IRA.

Additional Funding and Flow of Funds QUESTIONS:

If I need to add more funds, do I need to do that in a certain way? Let’s say I need another $10K to complete a property purchase.

Does the money have to come from another IRA or can it come from my own pocket?
Does the money have to be added/transferred to IRA Services first and then to the checking account?

ANSWERS:

Good questions. The funds cannot come from your own pocket. Reason being, the LLC is owned by your IRA and it would result in a prohibited transaction if you commingled your your personal funds with IRA funds.Instead, you can make an annual IRA contribution based on the IRA limits for the year, and/or transfer other IRAs or former employer retirement plans to the IRA.

The annual IRA contribution and/or transfers from other IRAs or former employer retirement plans  have to first flow directly to the self-directed IRA because they must flow to an IRA in order to maintain there tax sheltered status. Once inside the self-directed IRA, they can be invested in the IRA LLC.

Rent Checks QUESTION:

If purchase real estate through the IRA LLC and collect rent, who will the check be made out to?  My company name or the IRA custodian?

ANSWER:

The main purpose of investing an IRA in a LLC is to invest in real estate through the LLC; therefore, not only will the LLC own the property, all the rent checks have to flow back to the LLC bank account. As such, the rent checks must be made payable in the name of the LLC.

Paying LLC Fee QUESTION:

I’ve been told by another firm that if you form an IRA LLC w personal funds (rather than have the IRA pay for formation) it can invalidate the IRA LLC? The IRS can say it wasn’t formed properly?

ANSWER:

The key is to distinguish between expenses incurred before the LLC is owned by the IRA and those expenses incurred after the LLC is owned by the IRA.  Expenses incurred before the LLC is owned by the IRA are paid with personal funds because the LLC is not owned by the IRA.

Withdrawing Funds QUESTION:

I believe that I read somewhere that if I plan to withdraw Assets from the IRA LLC that an Appraisal would need to be done at the end of the year preceding the withdrawal.
Would this apply if I do not plan to sell any Assets, but, instead only plan to withdraw earnings?
I have Rental Properties held in the IRA LLC, from which I may need to withdraw earnings to pay Medical Expenses next year.

ANSWER:

Before you can take distributions, the funds must flow back to the IRA, as the distributions have to flow from the IRA. The IRA custodian will then ask you to fill out a distribution form and will subsequently disburse the funds. They will then issue a 1099-R to report the distributions by the following January for filing with your personal Form 1040 tax return.

You cannot process distributions from the IRA owned LLC directly to you as that will result in a prohibited transaction. Again, the funds must first flow back to the IRA custodian.

Roth IRA 5 Year Clock QUESTION:

Question related to the holding period (5) years on a new ROTH IRA. I currently have a ROTH IRA that is approximately 1 year old with TD-Ameritrade. Will I be establishing a brand new ROTH IRA that requires the full 5 year period or can I fund the self directed ROTH IRA with funds from my TD Ameritrade ROTH IRA? How will this impact the 5 year waiting period?

ANSWER:

The 5 year holding period for the existing ROTH IRA will carry over and won’t start over provided it is processed as a direct rollover.

Bitcoin Coinbase QUESTION:

If I already have a Personal Coinbase account…could I link or add my new IRA LLC checking account & pay for cryptocurrencies this way or would I have to create a new account with Coinbase?

ANSWER:

No you cannot commingle IRA LLC funds with your personal funds when investing in bitcoin. Therefore, a separate coinbase account will need to be linked to your IRA LLC bank account. If done through GDAX, the account will need to be titled in the name of IRA LLC and only IRA LLC funds can be used.

 

60 Day Rollover Distribution QUESTION:

I took a $16k IRA distribution a month ago but really only needed $14k can I put the excess $2k back into my IRA account?

ANSWER:

If you did not process any other 60 day rollovers during that 12 month period from this IRA, or any other IRA then yes the rules  allow you to rollover part or the full IRA distribution to the IRA as long as 60 days have not lapsed since you received the IRA distribution from the IRA custodian. You will need to first deposit the funds directly into the IRA not the LLC. You will need to contact the IRA custodian to get a copy of their 60 day rollover deposit form.

1099-MISC QUESTION:

Could you please let me know if we have to file Form 1099-MISC for vendors who provided services to IRA LLC and were paid from the IRA LLC bank account.

ANSWER:

While a solo 401k plan is required to issue a 1099-MISC,  the same requirement does not apply to an IRA per the IRS on the “Instructions for Form 1099-MISC“.

Additional Funding for Existing Trust Deed QUESTION:

A question about a possible prohibited transaction.
The primary business done from the account is short term real estate lending.  I currently have a property that I have the first position lien and deed of trust lent out of the IRA.  If the borrower needs more cash and I wish to lend, but I don’t have any additional funds in the IRA, is it an allowed transaction to lend the additional funds using a second lien and second DOT.  These two instruments would be complete separate.  The only indirect relationship would be the standard laws that the first deed is satisfied before the second.

ANSWER:

Good question and the answer is not because the trust deed is an asset of the IRA LLC; therefore, you cannot loan personal funds to the borrower. Instead, the IRA LLC would loan additional funds. Also, an IRA LLC is not allowed to obtain a loan solely for loaning funds to a third-party.

Additional Funding for Existing Trust Deed QUESTION:

I purchased a rental property in 2015 using my home equity line of credit from my vacation residence. Can I now refinance my rental property using my self directed IRA to pay off my line of credit and transfer ownership to the IRA LLC?

ANSWER:

Such transaction would result in a prohibited transaction.

Certain transactions between an IRA and its owner or an IRA and a “disqualified person” are specifically prohibited by law.

A prohibited transaction is a transaction between an IRA and a disqualified person that is prohibited by law.

The transaction that you are describing would run afoul with some or all of the following prohibited transaction rules:

Prohibited transactions generally include the following transactions:

  • a transfer of IRA income or assets to, or use of them by or for the benefit of, a disqualified person;
  • any act of a fiduciary by which IRA income or assets are used for his or her own interest;
  • the receipt of consideration by a fiduciary for his or her own account from any party dealing with the IRA in a transaction that involves plan income or assets;
  • the sale, exchange, or lease of property between an IRA and a disqualified person;
  • lending money or extending credit between an IRA and a disqualified person; and
  • furnishing goods, services, or facilities between an IRA and a disqualified person.

Help me Understand the Implications of the UBIT Tax QUESTION:

I am considering opening an IRA LLC mainly to invest in real estate. Can you help me understand the implications of the UBIT tax?

ANSWER:

It may apply if you are doing a large volume of flips (because it may be viewed as a business) or if you purchase real estate using non-recourse financing (in which unrelated debt finance income tax would apply). See more at the following link:  https://www.mysolo401k.net/ubit-and-udif-differences/

Help me Understand the Implications of the UBIT Tax QUESTION:

Can I run a self-directed ROTH IRA and trad IRA through the same LLC IRA?

ANSWER:

While specific reporting will apply, yes it is possible for two IRA accounts to invest in a single LLC (including a single LLC Bank account).  It is important to note that this means there will be two members of the LLC which means that a partnership tax return will need to be filed for the LLC with the IRS (i.e. Form 1065) as well as possibly filing to the state level

See more at the following link:

CFO QUESTION:

I reviewed your info and had a question.  Is it possible to invest a portion of my self-directed IRA in a P/E backed company which I’m the CFO?  My IRA investment would be less than 1% of the total equity and I would not be on the board of directors.

ANSWER:

No you cannot invest your IRA funds in a company for which you serve as the CFO.

Debt Financing for Real Estate Investment QUESTION:

Can you use the IRA LLC funds as money down on investment real estate and have a mortgage on the remainder?

ANSWER:

Yes, however, the debt portion would be subject to a tax called Unrelated Debt-Financed Income (UDFI) tax on IRA LLC investment income derived from debt-financed property, proportionate to the debt on the property.investing funds. For more information regarding UDFI please visit the following IRS web page: click here

IRA LLC Establishment Deadline QUESTION:

Is there a deadline for creating the IRA LLC account if I want to be able to contribute for the year?

ANSWER:

Unlike a self-directed solo 401k that has an establishment deadline of December 31, the IRA LLC can be funded with both rollover contributions (i.e. funds that are transferred from the existing account such as a former employer plan or an existing IRA) as well as contributions from your earned income. There is no deadline to fund an IRA with rollover contributions. The deadline to make contributions to an IRA from your earned income is your personal tax return deadline.

IRA LLC Pro-rata Rule QUESTION:

My IRA LLC is made up of both nondeductible (after-tax) contributions and deductible (pre-tax) contributions.  Can I just distribute the after-tax contributions and tax free?

ANSWER:

When an IRA contains both nondeductible and deductible funds, each dollar withdrawn will contain a percentage of tax-free and taxable funds. This percentage is based on the ratio of after-tax funds vs. the entire balance in all your IRAs. You cannot withdraw (or convert) just the nondeductible funds and pay no tax. Lastly, the distribution would need to be processed from the IRA not the IRA LLC, meaning the funds have to flow from the LLC bank account to the IRA custodian before you can take the distribution, as the IRA custodian will need to perform the 1099-R IRA distribution reporting.  On a side note, The pro rata rule states you must include the balances of all IRAs, even if they are in separate accounts (including balances in SEP and SIMPLE plans).

Roth IRA LLC Distribution QUESTION:

I am 62 and have had my Roth IRA for 6 years which I invested in a single member LLC 2 years back. I now want to take some distributions of the Roth IRA LLC gains. Will I owe any taxes from the distribution?

ANSWER:

First, before you can take a distribution, you will need to return the funds from the LLC back to the Roth IRA because the distribution must come from the Roth IRA and the IRA custodian will need to preform the 1099-R reporting, whether taxable or not. If a distribution from a Roth IRA is qualified, then both the basis and the earnings will be distributed tax and penalty free. This is one of the reasons Roth IRAs are so popular.  In order to be a qualified distribution, the distribution must occur after the account has been open for five years, and met one of the following conditions:
  1. The taxpayer is age 59 ½ or older
  2. Upon the taxpayer’s death or disability
  3. For a first-time home purchase

You appear to meet the above requirements since you are past the 5 year holding period and over age 59 1/2.

Age 70 1/2 RMD QUESTION:

I will turn age 70 1/2 this year, so am I required to take an RMD from my IRA LLC?

ANSWER:

Since she turns 70 ½ this year, this will be your first RMD year. The IRS rules allow you to delay your first RMD until next year if you want which would require you take it by April 1 of next year. However, if you delay your first RMD until next year, you will be required to take 2 (tw0) next year (this years and next years).  Lastly, in order to satisfy the IRA RMD, funds will first need to be returned from the LLC owned IRA to the self-directed IRA custodian since RMDs apply to IRAs not LLCs.

Spousal IRA LLC Contribution QUESTION:

I don’t have any earned income but my husband does, so can he contribute to my IRA LLC?

ANSWER:

Even though you don’t have any earned income, you can base your IRA contribution on your husband’s earned income. Known as a spousal IRA contribution, the IRS rules allow the non-working spouse to use the workings spouse earned income to make IRA contributions as long as you file a joint tax return. For the 2019 the IRA contribution limit is $6,000 plus $1,000 if you (the wife) is age50 or older. If you do make IRA contributions, they will need to first flow into the IRA and can then be invested in the IRA LLC, so that the IRA custodian can report the IRA contributions on Form 5498.
Lastly, once you reach age 70 ½, you will no longer be able to contribute to a Traditional IRA.

Loan QUESTION:

Do I have an option to take a loan form my IRA LLC like i would have with the solo 401k plan?

ANSWER:

No because the IRA rules do not allow for the IRA owner to borrow form his IRA or IRA funded LLC.

Invest  2 (two) IRA LLCs in Same Property QUESTION:

Can my wife and I each open separate IRA LLCs and invest them in the same rental property?

ANSWER:

Please note that if you each have your own separate LLCs you can certainly invest in the same investment. For example, you can each invest your separate IRA LLCs in a real estate property. In that case, it may be helpful to set up another LLC for that particular property. Otherwise, the property would need to be owned as a tenancy in common (i.e. the title would list both IRA LLCs as owners). Moreover, when the property is held as a tenancy in common all of the income and expenses need to be split in accordance with the ownership percentages. This can be an administrative burden: for example, in the case of a rental property the tenants would have to write two checks (e.g. one check your IRA LLC in the second check to your brother’s IRA LLC) unless you have a property management company collect the rent and then split the proceeds in accordance with the ownership percentages.

Contributions Based on Alimony Payments QUESTION:

Can I make contribution to my IRA based on alimony payments? I am a CPA and was not sure if in 2019 alimony was considered earned income for making a Roth IRA contribution. Would appreciate any clarification you can provide.

ANSWER:

Good question. Prior to 2019, yes alimony payments were considered earned income so the annual IRA contribution could be based on these payments. However, this all changed with the passage of the Tax Cuts and Jobs Act, making it no longer allowable starting January 1, 2019 which is outlined in IRS Pub. 504. However, the alimony payments are not taxable to the recipient anymore. Alimony is also no longer be deductible by the payor.

Contribute to SEP IRA & IRA in Same Year QUESTION:

I have a self-employed business and this year I made the full allowable SEP IRA contribution.  Can i also contribute to my Traditional IRA?

ANSWER:

Yes you can still make your Traditional IRA contribution for the year even if you already maximized your SEP IRA contribution for the year.  However, your IRA contribution may not be fully deductible because a SEP IRA is considered an employer plan so traditional IRA contributions will be subject to the active participant rules, resulting in not being able to fully deduct your IRA contribution.
you make a SEP IRA contribution for the year, you can still contribute to either a Roth IRA or a traditional IRA for the same year, as long as you are eligible. However, because you would be considered an active participant in an employer plan, it may prevent you from taking a tax deduction for an IRA contribution.
While not deductible, you may be able to contribute to a Roth IRA as well even if you made the full SEP IRA contribution, provided  your modified AGI is not over a certain limit.

Custodian of the Self-Directed IRA QUESTION:

Do you act as the custodian or do you partner with someone else?  If so, who?

ANSWER:

We will work with any IRA custodian who will allow you to invest your IRA funds in an LLC.  Most of our customers are at IRA Services Trust Company or Kingdom Trust.

Setup & Ongoing Fees QUESTION:

What’s the setup cost and the recurring maintenance fee?

ANSWER:

We charge a one-time flat $1,100 fee which includes everything to set up the LLC, obtain an EIN for the LLC and prepare the operating agreement and all of the other documents required by the IRA custodian to fund the LLC.  Going forward, we provide educational support with regards to the compliance rules applicable to investing in real estate, other alternative investments, etc.  Of course, the IRA custodian will have their own fees (which are minimized by use of the IRA LLC structure) – for example, IRA Services Trust company charges $50 per quarter (i.e., $200 per year).

SEP IRA LLC Contribution Past Age 70 1/2 QUESTION:

I am sole proprietor operation with no employees.  I am 73 and is still self-employed. Can I still contribute to my SEP IRA?

ANSWER:

Yes, just like the solo 401k rules allow for contributions past age 70 1/2, the same is true for the SEP IRA IRAs. Therefore, the business owner can continue to make SEP IRA contributions past age 70 1/2.

Can a Minor Open an IRA QUESTION:

Can my 5 year old daughter open a Roth IRA?

ANSWER:

Yes, as long as she has earned income. Child actors, models, minors who do office work, etc., may have the earned income that makes them eligible to contribute to a traditional IRA or Roth IRA.

The challenging aspect of a minor owning an IRA is the contractual nature of an IRA. To open an IRA, an individual must execute a plan agreement, which is the legal contract between the IRA owner and the financial organization. State laws generally restrict minors from entering into contracts. To overcome this challenge,

When opening the child’s IRA, most states  require a parent or guardian to co-sign the IRA application which the IRA custodian can confirm if this requirement applies in your child’s state of residence.  The parent or guardian then makes decisions about the IRA until the minor reaches the age of majority, which varies from state to state.  Lastly, the child’s IRA can then be invested in an LLC for investing in alternative investments such as real estate and promissory notes, etc.  Of course, you may want to wait until the child’s IRA has enough funds to invest in an LLC if the plan is to use it for investing in real estate.

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