Checkbook IRA Trust: What is it?

  • Total Control
  • Most cost-effective
  • Privacy & Anonymity
  • Consolidate with rollovers & transfers
  • Deductible contributions
  • Roth contributions
  • Nondeductible contributions
  • Invest in alternative asset classes
  • Eliminate transaction fees
  • Invest quickly and opportunistically
  • Simple administration
  • Can be implemented for all IRA types

A Checkbook IRA Trust gives you checkbook control of your SDIRA for investing in real estate, private loans and other alternative assets. It is an IRA-Owned Trust.

An IRA-Owned Trust is a trust of which the trust grantor and trust beneficiary are a Self-Directed IRA, which can be a Traditional or Roth SDIRA.

The Checkbook IRA Trust, although owned by the SDIRA as grantor and beneficiary, is controlled by an independent Trustee that has direct access to the trust bank account – for investing in private assets with total control and no transaction fees or SDIRA custodian paperwork & processing.

Checkbook IRA Trust: What it is not

Checkbook IRA Trust does not refer to a trust that is the beneficiary of an IRA. As described above, the IRA is the beneficiary of the Checkbook IRA Trust, not vice versa.

A qualified trust may be named as IRA beneficiary for estate planning purposes, as recipient of the IRA assets upon the death of the IRA account owner. In contrast, a Checkbook IRA Trust is used during the lifetime of an IRA-owner to streamline investing the IRA in real estate, precious metals, cryptocurrency, tax liens, private loans, and nearly any other type of investment you may want to pursue with a tax-sheltered SDIRA.

Why use a Checkbook IRA Trust for Checkbook Control?

Checkbook Control gives you the greatest control & the lowest fees and is usually achieved through a Checkbook IRA-LLC. The benefit of using a Checkbook IRA-Trust over a Checkbook IRA-LLC is the elimination of state filing requirements and annual fees for LLCs. For most states – and most investors – those costs are nominal, but for California residents the cost of maintaining an LLC is $800/yr. Another pricey state for LLCs is Massachusetts, at $500 for formation and subsequent annual LLC maintenance.

While in many cases, costly LLC fees can be avoided by domiciling an entity in a low cost jurisdiction – in some cases that solution is not available. The state of California may feel it’s entitled to an annual fee even when a CA resident domiciles an LLC in another state.

A Checkbook IRA Trust does not incur state imposed fees or filing requirements.

Are there complexities associated with a Checkbook IRA Trust?

There is greater uncertainty regarding Checkbook IRA Trust compliance. Therefore, at ReSure our preference remains to use Checkbook IRA-LLCs. However, to satisfy the increasing demand for Checkbook IRA-Trusts, we make them available and are glad to discuss the nuances with our clients so that they can choose whether to get checkbook control through an IRA-Owned Trust or IRA-Owned LLC.