Realistically, how long does it take to fund your plan? You are creating a plan and you should have a very realistic and conservative idea on the time required to fund your self-directed IRA.
I always advise folks to expect a 2 – 3 week time frame for this process. The reason for the delay is not the self-directed company. Typically, their work in establishing IRA LLC plan documents can be done within a couple of days up to a week.
As a quick refresher, the IRA LLC structure will permit you (or your designee) to be the manager of the LLC of which the IRA (and the IRA only) is the sole member of the LLC. As manager, you will have checkbook control of your funds and can invest on behalf of the LLC and the sole-member IRA. As always, you must follow all IRS regulations.
Another Self-Directed Company Says This Can be Done in Days!
First, let’s establish some ground rules. Can an IRA that is not going to have funds transferred or rolled over into the plan be established within a week…possibly. However, let’s assume that funds will be transferred or rolled over into the newly-established IRA.
There is a difference between the time needed to prepare the IRA LLC documents and the actual funding of the IRA LLC. What is humorous are companies that say, suggest or even hint that this can happen within a matter of days. I guess if the sun and moon are in perfect alignment, sure, anything can potentially happen…but, even then, it won’t be a matter of days. Why?
If a self-directed company is being totally honest and frank with you, they will tell you that the following reasons (and there can be more) dictate the expediency of establishing and funding your IRA LLC account. With mailing (or even over night options) requirements, do you think all of the following can be done in a “matter of days” (between two custodians)?
1) Mailing/Over Night Processing — Applications, forms, transfer requests for funds, receipt of transferred funds
2) IRA Custodian Opening Account — They don’t just instantly open an account even when they receive your application
3) “Transferring” IRA Custodian Processing Transfer Funds Back to Self-Directed IRA Custodian — This is not immediate
4) “Holding” Times — After receipt of transferred funds, most custodians will have a minimum 3-day hold on releasing funds to your IRA LLC
Whew! As you can see, any suggestion that this process can be fully executed within a matter of days is folly. It just ain’t going to happen…even if you pay for wires and over night mailings. And, this doesn’t take into consideration if you make an error.
I even saw a company that said that they will assist you in the “transfer” of funds. Now, what they may have meant is that they will assist you in completing a “transfer” form for your signature. But, please note, a self-directed company cannot and will not be involved in requesting the transfer of funds. Why? Because they are NOT the custodian and ONLY the IRA custodian can request funds in transfer. Even a suggestion that the self-directed company can, magically, assist you in making sure the transfer of funds is executed expeditiously is…incorrect.
Be excited about establishing your self-directed IRA! You are entering into an exciting venture, and one that can be of great benefit to you. Just expect a bit more time than just a “matter of days” for your self-directed IRA and its IRA LLC to be established and funded.