set up a single self-directed IRA to fund real estate backed mortgages

Good Day, I currently have IRAs with Schwab and Ameritrade. I own an LLC. I would like to set up a single self-directed IRA that I can fund real estate backed mortgages.

I have several questions that will direct my actions:

  1. QUESTION: is it best to set up a self-directed IRA thru Ameritrade since I already have accounts there?

ANSWER:  It is our understanding that neither TD Ameritrade or any of the brokerage firms offer self-directed IRAs that may be invested in alternative investments such as a singled member LLC. Instead, you will need to open a self-directed IRA with a trust company such as IRA Services Trust Company that holds alternative investments such as LLCs.

  1. QUESTION: Is it best to set up a self-directed 401K through the LLC and transfer the IRA funds into it? Is this transfer tax fee?

ANSWER: Two common options are:

1). Open a self-directed IRA and then invest it in a newly formed LLC containing all the required IRA regulatory language (a previously established LLC  is not acceptable as it won’t meet the newly established LLC requirement and, again, the new LLC must have specific IRA language  so a Legal Zoom LLC will not suffice).

2). Open a self-directed 401k instead but only if you are self-employed. Click here to learn about the self-employment requirements. The self-directed 401k can then invest in alternative investments directly (e.g., real-estate backed mortgages), thus eliminating the need for an LLC.

Thank you in advance,

Josh in Texas

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

  • About MySolo401k

    We help our clients take control of their retirement money. Our products and services provide our clients the freedom to invest their retirement savings in their own business as well as alternative investments such as real estate, private companies, promissory notes, precious metals, tax liens and equities.
    Learn more

    Connect with us

  • We’re here to help.

    Call: 800-489-7571

    Monday-Saturday

    7:00 am - 5:00 pm PT

    Why us?
MENU