Let’s talk about setting up a multi-member IRA/LLC. Now you can set up a IRA/LLC with just one IRA but some people like to combine multiple IRA’s into one LLC. That might be your ROTH IRA, Your traditional IRA, maybe it’s your IRA and your wife’s IRA, Your dad’s IRA and your IRA, your friend’s IRA and your IRA. It doesn’t matter, we are just talking about multiple IRAs. It could be 5 or 6 IRAs. I’m just keeping it simple with 2 here. Now when you set that up, there’s a couple things you need to know. First, we’re going to break up the ownership of the LLC based on the dollars invested from each IRA. So if my wife’s IRA invests $70,000 into the LLC and my IRA invests $30,000 into the LLC we’re going to break up the ownership, 70% to her IRA and 30% to my IRA. That ownership is going to be fixed and when there is profits coming out of the LLC Let’s say the LLC has $10,000 in profits $7,000 will go to her IRA and $3,000 will goes to my
IRA. Second thing that you need to know when you have a multi-member IRA/LLC is now you need to do a tax return for the LLC. It’s a partnership for tax purposes, the IRS is going to require a partnership tax return. Now there’s no tax due on a partnership tax return so it’s just an informational filing for the IRS to say, here’s what the partnership made and here’s the share that went to this partner and the share that went to that partner. So keep in mind, no tax due but the partnership return needs to be filed on an annual basis. Last thing you need to know about this type of structure is, it’s a little more expensive to set up. A multi-member IRA/LLC costs about $1,500 in our office to set up plus your state filing fees. So keep that in mind, it’s a little more expensive to set up. But of course the great benefit to the IRA/LLC with multiple members is you can combine multiple sources of funds. You could have multiple IRA’s investing into one LLC to buy a specific asset. So if you need to combine different accounts; it’s a great strategy. A multi-member IRA/LLC can be used to buy a particular asset. Thanks for tuning in. For more information, click the link below. Where you can access my free self-directed IRA investors kit. That’s full of videos, blog articles, and other resources to better help you take control of your retirement.