Self-directed IRA LLC Question Answered – Can I fund my IRA LLC bank account with personal funds?

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Self-directed IRA LLC Question: I am looking to set up a Roth IRA LLC to invest in cryptocurrency.  Can I fund the LLC bank account with personal funds?

In short: No – the LLC bank account has to be funded with funds from your Roth IRA.

It is important to understand the IRA LLC structure.

A self-directed IRA LLC allows someone who is not eligible to set up a Solo 401k (e.g. because such person is not self-employed or even if they are self-employed, they’re not eligible to set up Solo 401(k) plan because they have full-time W-2 employees working for their self-employed business) to be able to invest his or her retirement funds in alternative investments with checkbook control.

Another scenario where a Self-directed IRA LLC is often used is when someone (even who is eligible to set up a Solo 401k) wishes to invest funds in a Roth IRA in alternative investments with checkbook control.  This is because one can’t transfer funds from a Roth IRA to any type of 401k including a Solo 401k.

With the IRA LLC structure, the sole member of the LLC is the individual’s IRA and such person is the manager of the LLC. Ultimately the IRA funds are deposited in a bank account under the name of the LLC, and as the manager of the LLC such person will have direct checkbook access to the funds.

Since the LLC is an investment held in one’s IRA account, one cannot fund that LLC bank account with personal funds.  If such person was eligible to make an IRA contribution, such contribution amount would have to be deposited first into the IRA and then invested from the IRA into the LLC bank account.

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About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>

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