Checkbook control (Checkbook IRA) is making an investment as simple as writing a check, swiping a debit card, or sending a wire transfer or EFT from a trust account or the LLC’s business checking account.
How is checkbook control different than normal retirement and trading platforms?
If you bring a special, new, or alternative investment to your typical brokerage platform, platforms can charge exorbitant fees or sometimes refuse to hold the investment if they don't hold similar investments already. They could also change their position on that investment with their compliance team years later, leaving you in a bind.
Do I need to have a physical checkbook in order to have "Checkbook Control?"
All of our Core and Gold IRAs have access to a checking bank account, which has the ability to send money to almost any allowed investment. A physical checkbook is not necessary, but a nice way to send money from your IRA LLC's checking account.
What are some of the advantages of the checkbook control model?
- Due to the unique structure provided by your Rocket Dollar IRA LLC or a Solo 401(k) retirement trust, you take control over the deal review process as manager of the or the IRA LLC or trustee of the Solo 401(k) retirement plan. You or the investment provider do not have to wait to get the deal approved on any type of platform. The checkbook control structure of an IRA allows the manager of the LLC to approve investment decisions.
- More control over the asset: Your IRA LLC or Solo 401(k) is the owner of the asset. With an IRA, your IRA is the 100% owner of the IRA LLC Rocket Dollar provides you the vehicle to help custody the asset instead of holding the asset on Rocket Dollar's books.
- More flexibility to manage your investments day to day and throughout the year. Manage your account through your bank account. As the manager of the IRA LLC, you can be a signer and approve basic functions. (sign contracts, checks, receive income to put into your IRA's bank account and pay expenses directly from your bank account. just make sure to not commit a prohibited transaction by commingling your funds)
- Less custodian control over your money: Other than getting approval by you to move money from other retirement accounts, Rocket Dollar does not take any authority over your personal funds. That money moves from your old retirement accounts into an FDIC insured bank account that you have complete control over.
Why isn't the IRA LLC and checkbook control more popular?
Self-Directed asset investment has long been expensive or thought to be a tool of the mega-rich. The IRA LLC model was usually sold by lawyers or companies that would charge at least $1000 for setup, sometimes as high as $5,000. An investor might have to visit a lawyer, talk to a custodian to open and IRA, open their own LLC, and then find a bank that understood self-directed investing and wouldn't shut down or give them trouble over their account because it was not understood.
Rocket Dollar has been aiming to democratize access to the checkbook control model, which has become more and more popular for years as alternative investors want more control over their alternative retirement investments.
How do I get checkbook control with a Rocket Dollar Self-Directed IRA?
With an IRA LLC, we will provide you with the LLC articles of incorporation, LLC operating agreement, and an EIN so you can take the forms to your bank and open a business bank account. You’ll have checkbook control of the bank account. For a Self-Directed IRA, we typically open up IRA with an LLC.
Money moves from the IRA>IRA LLC> LLC Bank Account. You can send the money to and from this bank account. You send money out to any investment you wish, then return capital, earnings, and related cash once you sell the investment, just as cash returns to your IRA from a stock or bond purchase.
How do I get checkbook control with a Rocket Dollar Self-Directed Solo 401(k)?
For a Self-Directed Solo 401(k), we will provide you with the plan documents and EIN document so you can go to the bank of your choice to open the appropriate number of trust accounts.
In most cases, you’ll need to open two bank accounts: one for pre-tax dollars and a second for Roth dollars. The solo 401(k) plan establishes your retirement plan as a retirement trust. You will have checkbook control with each corresponding bank account. It’s important to keep pre-tax and Roth funds separate at all times.
If you’re going to buy or hold real estate inside your Self-Directed Solo 401(k), you may opt to create an LLC that your Solo 401(k) invests in for an added layer of liability protection. Your Solo 401(k), a retirement trust, can then become the 100% owner of that LLC.
If I'm used to getting an investment through a broker or custodian, how does my Rocket Dollar account access this investment?
When you are ready, you can purchase the shares directly from your LLC Bank account (or Trust Bank account for the Solo 401k) or the broker can open an LLC/Entity/Trust trading account. You fund the trading account with your Rocket Dollar account, and then report your tradable assets in our investment tracker.