Do you have an IRA or a 401K? According to the Federal Reserve’s Survey of Consumer Finances, in 2013, about 45 percent of households aged 25 to 64 had balances in retirement accounts. Do those 45 percent of Americans know what their retirement accounts are invested in? Most likely not, and that doesn’t bother most people, but if you need more out of your retirement account, then a checkbook IRA might be for you. The freedom that comes with a checkbook IRA allows you to invest in real estate, precious metals, and other hard assets. So how does it all work?

What is a Checkbook IRA?

A checkbook IRA is the same thing as a regular IRA except that the custodian allows you to take control of the checkbook for the IRA. What does that exactly mean? With a regular IRA you have to go through your custodian when making any investments for your IRA. If you wanted to purchase gold with your IRA, you would have to contact your custodian and let them know what you are wanting to do. You would then have to work with them to finalize the investment. If you have a checkbook IRA, instead of going to the custodian to make the investment happen, you do it yourself.

Setting up

Another name for a checkbook IRA is a self-directed IRA LLC with checkbook control. It’s called this because to establish a checkbook IRA, you must establish a limited liability company (LLC) that is owned by the IRA, and managed by you, the account owner. Then the IRA owner’s funds can be transferred by the custodian to the new IRA LLC bank account. Because you are the manager of the IRA LLC, you will have the authority to make investment decisions on behalf of the IRA. With this authority, you then have the ability to write checks from the IRA LLC bank account for your investments. Thus, cutting out the middleman.

With a checkbook IRA, you’re able to invest in the things you want without hassle or waiting for someone else to do as you’re asking. You’re in control, so you have the power over what you’re investing in, and the owner of a truly self-directed IRA.