FAQs

FAQ for Checkbook IRA Creation

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1. What is a Checkbook IRA?

A: A Checkbook IRA is a self-directed individual retirement account that gives the investor checkbook control over IRA funds. It typically involves setting up a limited liability company (LLC) that the IRA owns, allowing the investor to make investments directly from the IRA through this LLC.

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2. How does a Checkbook IRA differ from a traditional IRA?

A: Unlike a traditional IRA, where investment decisions are often limited and managed by an IRA custodian, a Checkbook IRA allows for greater flexibility and control, enabling a broader range of investments, including real estate, private companies, or precious metals.

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3. What are the steps to set up a Checkbook IRA for INDESTRL?

A: The steps usually involve:

• Establishing a self-directed IRA with a qualified custodian.

• Forming an LLC and having the IRA invest in it.

• Transferring IRA funds to the LLC’s bank account.

• The LLC, directed by the IRA holder, then makes the investment decisions.

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4. What are the investment limitations of a Checkbook IRA?

A: Investments must not violate IRS rules, such as investing in collectibles or engaging in prohibited transactions with disqualified persons. It's crucial to understand these rules to avoid penalties.

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5. Can INDESTRL employees use their Checkbook IRA to invest in the company?

A: This can be complex and often depends on the specific circumstances and IRS rules. Generally, investing IRA funds in a company where you have significant control or interest could be considered a prohibited transaction.

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6. What are the tax benefits of a Checkbook IRA?

A: The tax benefits include tax-deferred or tax-free growth of investments, depending on whether it's a Traditional or Roth IRA.

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7. Are there any annual reporting requirements for a Checkbook IRA?

A: Yes, there may be reporting requirements, such as the IRS Form 5500, if the Checkbook IRA meets certain criteria. It's essential to stay compliant with IRS regulations.

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8. What are the risks associated with a Checkbook IRA?

A: Risks include potential IRS penalties for non-compliance, investment risks, and the responsibility of managing the IRA without professional guidance.

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9. Can INDESTRL provide advice on investments for a Checkbook IRA?

A: INDESTRL can provide general investment advice; however, specific advice related to IRA investments should come from a financial advisor or legal professional knowledgeable in IRS regulations and retirement planning.

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10. How can an INDESTRL employee set up a Checkbook IRA?

A: Employees interested in setting up a Checkbook IRA should consult with a financial advisor who specializes in self-directed IRAs and understand the costs, responsibilities, and IRS guidelines associated with such an account.

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