Speak with a Broad specialist:
(800) 395-5200Schedule a CallOpen an Account
Speak with a Broad specialist:
(800) 395-5200Schedule a CallOpen an Account

March 30, 2022

5 Self Directed IRA Mistakes to Avoid

  1. Never apply for a credit card in the name of the LLC. Credit card companies are always looking for new customers, and often mail credit card applications to newly-formed businesses. If you receive a credit card application for the LLC, never fill it out or sign it, because by doing so, you will be issuing a personal guarantee on behalf of the LLC which is a Prohibited Transaction. Additionally, do not apply for overdraft protection or for a line of credit for your account, for the same reasoning.
  2. Every investment made must be for the exclusive benefit of the Self-Directed IRA and not for the non-IRA benefit of you or any other person. You must be diligent to avoid any direct or indirect “Prohibited Transactions”. Never enter into a transaction without first reviewing the Prohibited Transaction Basics as well obtaining the appropriate legal, tax, and investment advice – as Broad Financial does not provide this type of advice.
  3. Remember to make all contributions to, and take all RMDs directly from, your Self-Directed IRA, and not the LLC’s checking account. The LLC is merely an asset/investment of your IRA (just like stock in Apple, IBM, or the like).
  4. Although you hold the checkbook to your IRA’s LLC, always remember that the checking account is an asset of your IRA, and as such never borrow money from it. (You may not lend to it either, except in very limited circumstances.)
  5. If the LLC is owned by two or more IRAs, the ownership structure (i.e. the percentage of ownership of each IRA) can never change. This means that all transfers of funds between the IRAs and the LLC must be based on the original percentages. For example: If Mr. Smith’s IRA initially invests $25,000 into the LLC and Mrs. Smith’s IRA initially invests $75,000 into the LLC, then Mr. Smith’s IRA owns 25% of the LLC and Mrs. Smith’s IRA owns 75% of the LLC. Therefore if Mrs. Smith wishes to transfer $7,500 from the LLC back to her IRA, then Mr. Smith must transfer $2,500 from the LLC back to his IRA. The same would also apply if the transfer takes place from the IRA’s to the LLC.

At Broad Financial, our experts can be your most valuable source when it comes to these matters.


call now


Evaluation Form

Contact Us

One Paragon Drive
Suite 270
Montvale, NJ 07645

Phone: (800) 395-5200

Mondays – Thursdays: 8:00 am – 6:00 pm EST
Fridays – 10:00 am – 4:00 pm EST


Get the latest news and insights on Self-Directed IRAs and Solo 401(k)s right to your inbox.
Sign Up For Newsletter

magnifiermenuchevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram