Now we have 3 Ways! to DRS with an IRA LLC
š Way #1 = u/lalich blazed a trail posting a full service route to the same end with Madison Trust many moons ago (7 to be exact), and
Way #2 = u/Existing-Reference53 posted about IRA Financial Trust. This can also be a full service route, and they seem to be all about helping out GME shareholders.
Quick note on IRA Financial: Adam has agreed to discount the initial setup fee to $400 for apes (savings of $599!) as long as IRA F. is custodian ( annual fee is $360 ). The startup includes all the LLC and EIN filing and docs. ( Additional LLC fees of $200 apply for TX, TN, MA and CA. )
This Way will cover LLCing withā¦ wait for itā¦ Mainstar Trust! š
(And yes, they are probably operating out of a little gas station in the middle of nowhere, which is precisely why I love working with them.)
Also props to u/Bibic-Jr for the reminder and laying out a great overview of the IRA DRS options - see his profile.
So I tried a more DIY version of IRA LLC to save some cash to DRS even more. It only took me, oh, about 7 months. And I'm still working on it!
Trust me, Iām a professional
(but seriously don't take my advice on anything DIY. And to be fair, I'm almost done.)
I already have IRAs in DRS following u/winebutch and u/BananyaBangarang ās posts. Those shares will stay. I wanted to set up an IRA LLC for 2 reasons:
- just to see if I can
- for more freedom of where and how I invest in the future
Note: this process is the same for a traditional or Roth IRA. I used my Roth.
For probably a better summary of the IRA LLC process at Mainstar Trust than my incoherent ramblings: https://mainstartrust.com/use-a-mainstar-trust-retirement-account-to-invest-in-a-limited-liability-company-llc
Not sure if anyone here has seen this, but hereās another pretty fantastic resource if you havenāt checked it out yet š
Ok, now where were we?
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STEP 1 - the IRA
Open a new account. If you are transferring from another custodian, it should be the same type of account (i.e. set up a new Roth to transfer from a Roth, or a traditional to transfer from a traditional or SEPā¦). Again, this page is where you start that at Mainstar: https://mainstartrust.com/use-a-mainstar-trust-retirement-account-to-invest-in-a-limited-liability-company-llc
COST: $25 one time, and $146 annually (for Mainstar)
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STEP 2 - the LLC
Set up a new LLC in your state. You can pay to have it done, but this is really not difficult to do yourself, and the process varies by state. I did not want to pay any more than I had to, and I already had a previous LLC, so I did this myself.
ā
- Hereās a good source for how the process for different states' LLC formation works: https://howtostartanllc.com
- Set up cost fees vary by state (see this list of fees for every state: https://www.newstandardira.com/states-summary/
- If you happen to live in the state of Wisconsin, or want to set up an LLC here (not advice and I have no idea if you can do that), it only took me a few minutes on onestop.wi.gov, DFI (Dept. of Financial Institutions) website. It walks you through it. Basically fill out an app and pay $131 (+$25 if you want expedited service).
COST: $131 one time, and $10 annually to state (varies by state)
- Name of the LLC - this does NOT need to include the custodian name or āIRA,ā or even your name. Butā
- If it has your first or last name, you wonāt have to file a ādbaā¦ā form to say you are ādoing business asā¦ā Yours could be āFrankās DRS GME, LLCā or āLFG, LLCā
- The name has to have LLC at the end of it and be a name that is not already on file, thatās all I know for sure.
(who am I kidding, I donāt know anything for sure, just follow your stateās rules ;)
- The registered agent should be the owner of the IRA account (probably you)
- If any members are to be named, list the IRA as the sole member. This should look something like āMainstar Trust CFBO _(your name)_ Account # _(new IRA account#)_ .ā This is where itās handy to already have an account.
- You can save the Articles of Organization at the end of filing for your new LLC. It should look something like this (for WI):
Hmm yes, very organized this one is. Notice the effective date.
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STEP 3 - the EIN
- Apply for an EIN for your LLC: EIN (Employer Identification Number) ā> apply and get EIN instantly from IRS. Follow the steps at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
Took about 8 minutes. I coded mine as a new company > Finance > Investment holdings. Youāll get an email or confirmation instantly, like this. (below)
The only letter you'll ever be happy to get from the IRS. --and again, the date.
Oh yeah, the Operating Agreement
- The part I did decide to hire out was the drafting of my IRA LLC Operating Agreement. After studying samples of these, I realized it would save me money in the end just to pay to have this written. Two options that each cost $299 for just that (necessary) aspect, tailored for each state can be found at https://irallcoperatingagreement.com or https://iravillage.com/services/operating-agreements/ *
COST: $299 to service to draft Operating Agreement
* the second option (yes, I paid for both because I evidently hate money), seemed to be a better end product, and also agreed to provide an opinion letter. Iām still waiting for that opinion letterā¦
You can download a sample IRA LLC Operating Agreement here: https://www.irallcchecklist.com The checklist looks something like this.
ā¦and the sample OA is 18 pages of legal. Here are pages 5-6.
These people also offer a service to write your Op. Agreement for you for $399, or even more services for a higher cost.
If you donāt want to submit your email to get the above free samples in their entirety, you can trust me that the rest is equally riveting. I read through a couple of these. It was not worth my time to try to write up correctly, but you can; hey, anything is possible.
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STEP 4 - the OPINION letter
- You need to provide an opinion letter from a financial professional along with the LLC documents.
- This was by far the most challenging part of my DIY method of the IRA LLC. For some reason, each CPA or lawyer (family friend) or online tax or legal service I contacted would at first agree and then after a while turn around and say āoh, no no, thatās not a service we provide,ā
- But Lo, Mainstar came through with a copy of an actual letter they have on file for a different LLC they have, so I turned that letter into an Opinion Letter Template, which ANY financial person with letterhead can simply review (along with the Operating Agreement) and sign for you.
- After what felt like years of failed attempts, I found a wonderful lawyer on freelancer.com who took the job! He is actually in New Zealand (shoutout to all my kiwi apes out there, good on ya, mates!) His name is Stuart, and heās the best.
- This cost me $400 but I was also getting pretty desperate and had never used freelancer before so I just threw a number out there. Since he has now already done one, I just asked him for a fair price if I sent a few of my friends over to him for the same service. Will update.
And that's my opinion letter sob story, hereās a quarter.
But hey for anyone who wants a copy of aforementioned āOpinion Letter Templateā - I pasted it as a post pinned to my profile. Exciting stuff. I donāt know how else to share it, kinda long, so itāll do for now.
COST: $400 (my 1st go on freelancerā if you know a financial person you should be able to get this cheaper - and IRA Financial provides it at no charge)
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š„³ Congratulations, you are the proud owner of a brand new Limited Liability Corporation! Now for the fun partā- no no, not moving to the Caymans and partying with the uber rich, yet ā
ā¦now your IRA buys 100% of the LLC
Here you are pretty much following the instructions from that link above or from emails from very helpful people who work there that hold your handā¦
- For Mainstar, you fill out an application for "alternative assetsā - Asset Information Worksheet
From email instructions from Mainstar:
The form will need a current value per share, signed and returned. In other instances we have seen the price per unit/share listed at $1.00. Then for example, if I invested $5,000, it would show 5,000 units/shares. The units/shares would equal amount invested or value of their investment in the LLC. If that works for your scenario please update the AIW with this price, sign and return.
- From #1 above, also submit the following LLC documents, along with that form from #3 (for Mainstar), to the new IRA LLC custodian:
- Articles of Incorporation (from filing your LLC in your state)
- Operating Agreement (drafted)
- Subscription documents (provided with Operating Agreement with instructions) It basically says how many shares and the $/share your IRA is purchasing the LLC forāyou choose the value per share and # of shares based on how much you have to start with. Can be $200 or $200K as long as it is in your IRA account. Below is my Subscription page.
Yes. I opened my checking account with a dollar.
- Opinion Letter, from Stuart or any financial person (again, a template for this is pinned in a post to my profile page - too long to paste here)
- Once IRA LLC is in their system, they will have you send a Purchase Authorization to purchases@mainstartrust.com - Purchase Authorization form
- A few days later, you will receive a check in the mail for that amount, payable to your LLC, to open a new checking account at a bank or credit union of your choice, under the name and EIN of your newly formed IRA LLC.
- Once you have a business checking account, you can use this for any approved investments you may choose, such as purchasing stocks that you like directly through a transfer agent. Just open a new account at Computershare in the name of the IRA LLC, with its EIN instead of your SSN.
To transfer shares already in your IRA, follow these instructions, also from an email from Mainstar:
Once you get the account set up with Computershare you can send us a letter of instruction asking for your current shares to be transferred into the LLC within your IRA and provide the Computershare account number. We will send that request to Computershare and get everything merged into the account number.
So again pulling from u/lalichās post from months ago, he has this sample Letter of Instruction linked in it. May not be exact per every broker or custodian, but it should do the trick. - copy/pasted below (more for my future reference than anything, I think)
āāāāāā-
**Sample Letter of Instruction**
[Date](Your brokerās nameYour brokerās address Your brokerās fax number)Dear (Your broker):Re: (Your Name & Account Number)Please transfer ___ shares of (Security Name and Ticker Symbol) from the above captioned account. Please send to the account listed here:Account #: ___________________Brokerage Firm: ___________________DTC #: ___________________Account Name: ___________________If you have any questions about this transfer, please call (me/us) at (phone number).Thank you,(Signature of Account Holder(s))(Address of Account Holder(s))
** Many brokerage firms will take a fax of your letter of instruction. Please call your broker for instructions on how to most easily facilitate the transfer of securities from your account.**
āāāāāāā-
OK the formatting leaves a bit to be desired, but it's better than chicken scratching on a legal pad. š
That's all folks
I am currently waiting 10 days to be able to access the money in my new IRA LLC checking account. Note: if you go credit union for your LLC checking account and arenāt a member, either sign up early or wait, like me :(
TL;DRS
- For DRSing IRAs via IRA LLC, we now have Madison, IRA Financial, and Mainstar as posted options that I know of
- Madison Trust = annual fee ($380) and upfront ($1550) but they do everything, basically turnkey - if you go with them and wanna throw a credit at an OG trailblazer u/lalich who found them, here is that link: Madison Trust
(I make nothing from any links, just saw this on his post and thought Iād pass it on)
- IRA Financial IRA LLC = annual fee ($360), but agreed to discount their normal $999 startup fee down to $400 for us ($600 for TX, TN, MA, CA) which includes the LLC, Articles, Operating Agreement, EIN, and state filing fee.
- Mainstar IRA LLC = annual fee ($146) but more DIY and higher upfront time and cost ($6-900 for the DIY LLC, not included)
- Each of these companies will pretty much hold your hand and walk you through it. So far I know at least the last two have.
Peace, my brothers and sisters
Edit: fee details for custodians
Posted Oct 20, 2022, 7:19 AM UTC Ā· edited