Guest Speaker: Mat Sorensen

IRA LLC’s, “Checkbook Control” and How They Can Help You as a Real Estate Investor

Mat Sorensen is the CEO of Directed IRA and Directed Trust Company, a lawyer, bestselling author, national speaker and expert on self-directed retirement accounts. His company establishes and serves as custodian for all types of self-directed accounts (IRAs, Roth IRAs, HAS, Coverdells, Solo K’s, custodial accounts) for self-directed asset classes such as real estate, private company/private equity, IRA/LLCs, precious metals, and cryptocurrency. His book (The Self Directed IRA Handbook), a five star rated Amazon bestseller, is the most widely used and referenced book in the self-directed IRA industry and is endorsed or used for training by all major self-directed IRA custodians.  Matt is also an attorney and partner at Kyler, Kohler, Ostermiller & Sorensen, aka “The Entrepreneurs Law Firm.”

What you’ll learn about in this episode:

*What an IRA LLC is and why it’s a sure-fire strategy many real estate investors use. Essentially, it gives them checkbook control – a term used when an IRA holder has complete signing authority over his or her retirement funds

*Rather than the IRA owning the asset, outright, the IRA owns an LLC, which in turn owns the property and allows you to manage the bank account and sign off on the LLC transactions

*A detailed breakdown of the chain of command of ownership using an example of “John Smith,” who manages the LLC and is thus president of the “corporation.”

*Why those who own an IRA LLC should not get a credit card

*The meaning of the term “checkbook control IRA”

*The importance of having all the documents related to the IRA LLC operating agreement done correctly

*The reasons some think IRA LLC’s are controversial – and clearing up the misconception associated with them

*The case of Ellis vs. Commissioner, where improper appropriation of funds resulted in a prohibited transaction

*The reasons why some IRA custodians will not allow you to do equity trust, Quest IRA and millennium trust

*Some IRA custodians won’t do IRA LLC’s because these companies have been around a long time and “this is not their system”

*Another reason: people screw up IRA LLC’s but treating them like their own personal bank accounts, which is wrong

*General rules for what’s allowed and prohibited when it comes to IRA LLC’s

*How IRA LLC’s can be used for wholesaling and flipping contracts

*What got Mat into this area of the law – a client who used his Roth IRA to get an option on real estate

*If you’re doing real estate development  with your IRA, or if your IRA flips a lot of properties in a year, you can run into a tax called UBTI (or “Ubit”), which is a tax the IRA has to pay if it gets business income as opposed to investment income

*The different options a husband and wife who create an IRA LLC have if, say, the husband has $100,000 in his IRA and the wife has $50,000 in her IRA – and the many ways to divide ownership. Because it’s a partnership, the IRS requires a tax return

*Why Mat tells clients to “invest in what you know”

*Why mutual funds are the path of least resistance

*Why IRA LLC’s are becoming more popular among investors who want to be more proactive with their retirement funds

*There are a lot of variations on how the IRA LLC can be used


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