I ran across something today that may surprise you. I was reminded of why I founded the IRA Association of America. I hear some of the craziest things from prospects and new customers, such as

“My understanding is that my IRA can loan money to a Corporation I own part of.”

“I’ve heard that my company can do business with my IRA if things are structured right.”

First of all, these statements are both incorrect, and would each result in a prohibited transaction, triggering hefty tax penalties. Now, when I hear these type of statements I wonder where they come from. I’ve always figured that they must originate from various new, inexperienced companies with educational materials that are simply inaccurate. Today, I found out that I’m half correct. It is coming from inaccurate materials and sources, but to my surprise, these sources aren’t always new and inexperienced.

This post is in reference to an LLC facilitator called CHECKBOOK IRA located at www.checkbookira.net and www.checkbookira.com. These guys may be familiar to you because, at the time of this writing and for the past several years, these web sites come up in search engine results for terms like “ira llc” and “self directed ira”. Now, I’ve never met or spoken with the owner, Steve Sheperd, so I can only comment based on the information on his web sites.

Currently, if you go to CHECKBOOKIRA.net and click “legal rulings” it links to a ruling that says “Your IRA can make a loan to a company owned less than 50% by the IRA owner.” This caught my attention because the claim was contrary to the understanding given to me from seasoned Department of Labor agents. So I clicked the link and read the entire document. (It’s important to note that [Read more...]