There are some self-directed IRA companies that give a somewhat misleading picture of how long it takes for an IRA LLC to be established and funded.  An IRA LLC provides you the ability to have “checkbook control” of your IRA funds, and permits the IRA account owner (or their designee) to serve as manager of a special purpose LLC. The sole member of the LLC is the IRA plan. This arrangement, if structured and operated correctly, is a mechanism in which to secure true control of your IRA account.

No more being limited to investing in the traditional world of stocks, bonds and mutual funds. You will now have the ability to invest in any asset not specifically prohibited by IRS Prohibited Transactions. As the IRA LLC manager, you will have this capability to invest on behalf of the IRA plan.

Enough on that…how long does it (really) take to establish and fund the IRA account? How long to prepare the IRA LLC documents, wait for funding of the IRA, and then the amount of time before you fund your IRA LLC at your local bank?

Typically 2 – 3 weeks!

While the self-directed IRA company will be preparing the IRA plan documents during the following steps, it is fair to say that their responsibilities to you will be done well within and before the time your IRA account actually funds.  Let’s break down a realistic time frame on the entire process.

Step 1 — Contract with a Self-Directed Company

Step 2 — Mail IRA Application (even if you do it online, the custodian will still require the signed application forms to be mailed/over nighted) to them 

Step 3 — Establish IRA Account

Step 4 — IRA Custodian Requests Funds in Transfer

Step 5 — Transferring Custodian Processes Transfer Request

Step 6 — Self-Directed Custodian in Receipt of IRA Transfer Check

Step 7 — Self-Directed IRA Custodian Mails Funding Check for IRA LLC

Step 8 — Open Your IRA LLC Account

Okay, that was a bit dry, but it is provided for some basic education on the process, and to show that the overall process of establishing and funding your IRA LLC is not an over night process.

Bottom line: While document preparation for the plan will not be a timely endeavor, waiting (typical time associated with mailing forms) on the account to be established and funded are the steps that truly delay the process.

During these steps of establishment and funding, FSD will be preparing your plan documents. This will include:

1) securing the LLC Articles of Organization (from the State in which the LLC is domiciled)

2) securing the IRS EIN for the IRA LLC, and

3) preparing the special-purpose LLC Operating Agreement.

The special-purpose Operating Agreement is, quite honestly, the most important document for the plan as it identifies how the LLC must operate to comply with IRS regulations.

When a company says that they can establish and fund your IRA LLC within a matter of days…keep this blog post in mind. While the process can be sped up with over night transmissions of various applications, forms and documents, realistically you should be thinking about a 2 – 3 week process in establishing and funding your account. This information should be useful to you so that you know when you can realistically purchase an investment (e.g., real estate) using your IRA LLC funds.

As always, the information provided is intended to be educational in nature.  It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice.  You must always consult with your respective professional in all such matters.