Frequently Asked Questions about Self Directed Solo 401(k) and IRA Retirement Accounts with Checkbook Control

Our FAQ section was created so you can see common questions (and their answers) about self directed retirement plans with or without checkbook control, and why we are so confident that CompleteIRA is the right choice to make. Choosing an account type is another page designed to help you find what will serve your needs best amongst the various kinds of accounts.

We hope you find this very helpful and easy to use. If you are not able to find the answer to your question, please contact us so that we may answer you personally.

Is this legal? How can I know that?
Yes it is. You may reference the IRS website directly at www.irs.gov. We've taken some relevant highlights from publications 560 and 590 and made them available near the bottom of our supporting documents section. The IRS is neither for (nor against) using your retirement funds in alternative investments. Just as they are neither for (nor against) stocks and bonds. The valuable tool of an IRA owned LLC has over two decades of legal precedent to support it. If you'd like, we will email you some such case documents.
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Why haven't I heard of self-directed retirement accounts before?
Who would tell you? Your stockbroker? Wall Street will only let you invest in investments that pay them. A bank will suggest CDs while an insurance company will offer you annuities. The traditional investment community has control of over 97% of retirement accounts; and they make their living off those accounts. Why would they let you know of alternatives that wouldn't benefit them? The accounts we create not only enable retirement dollars in real estate and physical metals, but all manner of thing from horses to airplanes.
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Can my $50,000 IRA or old 401(k) buy a $200,000 house?
Just as most people use a loan to get the property they desire, a retirement account is able to get a loan (see our page on the topic for important differences between an IRA and 401(k) in this area). There is no limit to the quantity of properties your account can have loans on at once. No credit checks, no income requirements, and you are leveraging money. If $50,000 can secure a house for five or six years that you sell and make $100,000 on you've earned a 200% return that was backed by real property. How does the stock market compare with that?
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How does a self-directed Solo 401(k) or IRA invest in physical assets like real estate or aircraft?
IRA/401(k)/403(b)/SEP/SIMPLE/ESA/HSA or MPP accounts can all be moved to a self-directed account allowing all sorts of investment options such as private stock, notes, tax liens, real estate, businesses, and more. There are two methods; the custodian only and the checkbook controlled.

In the custodian approach they charge a fee, usually $100 to $200 per year per investment, and an additional fee of $10 to $50 for each transaction such as sending or receiving a check or document. These charges come out of your account automatically; though some custodians allow you to request a bill. If you hold more assets it gets very frustrating, and very expensive.

As an example: If you want to purchase an option on a piece of land you came across; you would settle on terms with the seller, contact your custodian, request they have an inspection or similar done if warranted. You'd provide the "who" and they'd send the fee. Once completed, you'll be required to send in and have them review the documents. If they approve, they will sign all the paperwork, get copies of said paperwork back to you and have the seller sign too. Upon getting the agreements signed by all parties (the custodian and the seller) they will fund and the deal will be done. As a rule, every time they send or accept anything, or have to file anything, there is a charge and time is consumed. If you are only going to do a single deal or two this is usually worthwhile for the cost savings.

If you are going to be making several such investments, any investment with lots of ongoing checks or paperwork, or any investment that requires quick decision making (such as a tax lien auction, forclosure sale, or buying bullion from a dealer), you should strongly consider using our method which eliminates all those additional fees and accelerates your ability to act.

We create accounts where your funds are ready at hand to invest and use just like your retirement account was a business you ran, or a trust you controlled. Is there an opportunity you want to pursue? Come to terms. Sign the papers. Write a check. Done. No delays and no fees. You'll have to keep records of what you're invested in (instead of the custodian doing it)... not much of a downside. Investors that plan to be involved with their funds almost always migrate to a checkbook controlled method. We can save you (and you can make) a lot more money over time.
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Where can I learn more about investing outside of the stock market?
"IRA Wealth" by Patrick Rice is an excellent first stop. It is a book that stands out in the self-directed world. The first edition does not cover the advanced strategy we employ of the LLC, but the principles are all applicable. It also talks about buying notes instead of property; something we have done with success and can recommend. "The RV Lifestyle" by Richard Parker is another great choice and working very well for some clients.
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What is a Self-Directed Custodian?
A custodian is required by the IRS to 'hold' your retirement account. A self-directed custodian allows you to fully direct the investments of your IRA that they are 'holding' for you (401(k)'s are different, and don't use custodians). Many custodians claim that they allow you to self-direct your IRA investments but then only let you invest in publicly traded assets (like stocks on E*Trade). A truly self-directed IRA allows you to make much broader decisions. It is important to have quality assistance (like CompleteIRA) to help stay in compliance.
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What is a checkbook controlled retirement account?
It is a tool for putting you in control of your IRA or 401(k) assets. You won't have to ask your custodian to approve an investment, wait for a check to be written and mailed, or pay an annual filing or administration fee for each investment. You'll truly have a self-directed Solo 401(k) or IRA because you'll have a checkbook controlling your retirement dollars in an account owned by, and specially created for its benefit. This is often an LLC in the case of IRA accounts, but need not be for a Solo 401(k). The use (or not) of an LLC is something that will vary depending on your needs, and we'll be happy to go over it with you. Using our method you'll save money each year as the custodial charges are much lower this way. An active investor will save thousands (or tens of thousands) over a decade with this approach.
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What can I invest in with your Solo 401(k) or IRA plans?
Almost anything. Your IRA LLC can make nearly any investment a regular LLC can as long as you stay away from insurance, collectibles, and S-corps. Further, you may not have any "self dealings" without a DOL exemption; which is unlikely and rather expensive. Basically everything else on earth is allowed. Below are just a few ideas:

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My IRA is small. Can I personally co-invest with it or maybe with my Spouse's IRA?
It is not a prohibited transaction for you to co-invest with your IRA or Spouse's IRA per se. This is too bad as there are formalities that need to be adhered to, and most people who attempt it fail. That spells disaster for their retirement as their entire account is distributed and penalized. Wiping out a lifetime of savings. Please do NOT co-invest. There are much better ways of co-investing than mixing IRA and personal funds. We will gladly assist in this area. Just because it's legal doesn't mean it'll end well. Don't do it.
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Can my IRA co-invest with friends, or maybe my sibling?
Yes... Sometimes. IRAs may hold interests in various investments with other retirement accounts, businesses, or individuals. It is important to be aware who is a prohibited party to your IRA, as those people can't co-invest with your IRA. If they aren't a prohibited party co-investing could be fine. The problem is; even though siblings aren't a prohibited party you still shouldn't co-invest with them. And just because a friend has a good idea you might not be able to co-invest with them.

Usually co-investing with friends is fine. The issues related tend to be tied to employer/employee relationships and if there is other business deals between them. We review these situations for our clients (at no cost) to help make sure things look good.

With siblings? We would love to tell people 'yes, do whatever you like'... but it doesn't work. The tax code is large and though there are still folks shouting 'siblings can co-invest' the truth is that they can't really. The IRS has nailed people to the wall over this. In fact, if there is one thing you take away that seperates us from other facilitators it is that we are cautious and treat your money as carefully as we treat our own. Sibling co-investment isn't true. Most facilitators and custodians thought it was allowed for years; but now there is plenty of case law that shows it just isn't safe.

Anyone saying otherwise you should not work with. It is one (of few) easy litmus tests in this sector.
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Can I be the property manager of my 401(k) or IRA's Real Estate?
That depends. With just an ordinary self-directed IRA the answer is no. In fact you can't even change a light bulb on the property. The CompleteIRA structure allows you to perform limited maintenance on the property, advertise for renters, collect and deposit the rent checks, pay the real estate bills, etc. This clearly saves your IRA a lot of money and helps provide a more comfortable and prosperous retirement for you. There are limits and things that you can't do, so please talk with us prior to taking action.
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May I use my 401(k) or IRA funds to make improvements or renovations?
Yes. In fact, you must use retirement funds to make any improvements and pay all expenses associated with the property. All expenses are paid by the retirement account and all profits made belong to it. This makes sense because it is a retirement account investment.
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Can I buy vacation property with my 401(k) or IRA money?
Yes. Doing so would not constitute a prohibited transaction. However, you cannot vacation there. You must rent it out to other people until such time as you are retired and can take the home as a distribution. Anything your retirement account purchases must be an investment, and not something to benefit you now or in the future. In practice as long as the purchase is a legitimate investment, if you choose to distribute the property and decide to keep it at retirement there is no reason that would be faulted.
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Can I buy my dream home with my Solo 401(k) or IRA now, and then live in it when I retire?
Yes. You would use your retirement money to make the purchase and maintain the property. Any rents generated would be returned to the account. Upon reaching retirement age the property could be distributed to you. Please review the prior question as the same caveat applies.
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What's this all going to cost me?
A better question is "What's it going to save me?" Think about setting up a real estate closing so that $100,000 of profit could go into a Roth IRA. A savings of $35,000 in taxes from the start and have checkbook control the rest of your life! In another situation, a group of doctors were looking to open a new practice with 20% of the earnings going straight into their Roth accounts without having to worry about income limits or matching funds for employees. 20% of the earnings totally tax free- forever.

That said; these tools are not without an investment. The industry range for this type of account, counting custodial and state filing fees, is about $2,200 to $3,700. There are some cases, and older players that still charge $4,500 or even a percentage of the funds in your account(!). With us the total is $1,730 for an IRA, including much better support than other providers.

Most of our clients choose instead the Solo 401(k), which is a much better tool. The industry (which is smaller and much less capable unfortunately) charges roughly $2,600 to $5,800. We are very proud of the 401(k) platform we offer. It allows (in most cases) both spouses and children to have self-directed control as part of the same plan at no additional cost. The investment for that kind of plan, including support, is $2,370.

We are serious about the value we offer, and know its not wasted on our readers that we are one of the only providers willing to publish our fee. We welcome a conversation with you, and the chance to earn your business. We know you have options; and we work hard to make sure we're your best choice. Attorneys, Financial Planners, and CPAs all trust us with their client's needs. You can too.

Call us today to get answers, and get started.
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Do you have any presentations or files I can look over?
Yes. Our presentations section has several excellent presentations to look over. The section also has several PDF files available for you to review; including supporting IRS code, and memos with related highlights to Roth owned LLCs.

We are the only firm that offers both basic self-directed accounts, self-directed accounts that feature checkbook control; and in both Solo 401(k) and IRA form. This keeps our interests aligned with yours. Instead of trying to figure out how to get a square peg in a round hole, we offer the option of a round peg.

Our pricing is fair and reasonable. Our support, flexibility, and knowledge base set us apart from the crowd. We hope this has been helpful, and look forward to serving you.

Call us today to invest in your future; on your terms.