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Frequently Asked Questions

What are the legal implications of forming an IRA LLC?

Forming an IRA LLC, or a self-directed Individual Retirement Account Limited Liability Company, has several legal implications. An IRA LLC is a separate legal entity from its owners, providing them with limited liability protection against the business's debts and obligations. This means that the owners, also known as members, cannot be held personally liable for the business's debts, although there are exceptions to this rule. One of the main legal benefits of forming an IRA LLC is the ability to purchase non-traditional assets. Typically, IRA custodians restrict certain investments, making it challenging to contribute to traditional investments like stocks and bonds, as well as non-traditional investments. However, an IRA LLC allows the owner to use their IRA assets to purchase these non-traditional investments. Another legal implication is the checkbook control that an IRA LLC owner has over the funds of the IRA LLC. This means that the owner has signatory control over their retirement funds, offering greater investment flexibility. Additionally, an IRA LLC allows for the pooling of assets. If an individual wants to purchase an asset but lacks sufficient funds, other investors can pool their funds to purchase the asset through the IRA LLC.
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