Single Member IRA LLC | Multi Member IRA LLC

I have some IRS LLC questions that I hope you can help me with.

QUESTION 1 Do I have to file a tax return with a self-directed IRA LLC?

ANSWER: It depends if one or multiple self-directed IRAs invest in the same LLC. When only one self-directed IRA invests in an LLC (hence the name IRA LLC), the LLC is considered a single member LLC and is deemed a disregarded entity-this means the LLC is not required to file a federal tax return. However, if multiple self-directed IRAs invest in the same LLC, the LLC will be deemed a multi-member LLC and thus treated as a partnership for tax purposes. As a result, a federal tax return Form 1065 will be required to be filed every year.  The Form 1065 is filed with the IRS and is for informational purposes only; meaning, taxes are not due at the LLC level since the only members are the self-directed IRAs.

QUESTION 2: In September I become 59 and a half years old. Is there any advantage in this?

ANSWER: Only advantage is that you can begin taking IRA distribution without having to pay the 10% early distribution penalty; however, federal income taxes will apply on the amount distributed form the IRA.

QUESTION 3Am I allowed to make a foreign real estate purchase with my self-directed IRA LLC?

ANSWER: Yes but the country in which investments will be made may place restrictions. Therefore, make sure to check that country’s investment rules before investing IRA LLC funds. Moreover, certain countries may be restricted by USA law if they fall under the USA Patriot Act watch list.

QUESTION 4 Should I let my accountant know about this change I want to do on my Solo 401K?

ANSWER: Yes you should always run the IRA LLC transaction by your personal accountant. Plus we always welcome conference calls with your accountant or other professionals

Thank you so much for your help!


Julie 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 >>


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