How to Set Up a Self-Directed IRA with Checkbook Control in 4 Steps

For many investors, traditional IRAs can feel restrictive. Stocks, bonds, and mutual funds may play an important role in long-term planning, but they leave out an entire universe of alternative investments like real estate, private businesses, precious metals, notes, cryptocurrency, and more. That is where the Self-Directed IRA comes in.

A Self-Directed IRA allows you to take control of your retirement investing by dramatically expanding what you can invest in. When paired with checkbook control through a special purpose LLC, it becomes one of the most flexible and tax-advantaged retirement structures available today.

Below, we explain what a Self-Directed IRA is, why investors use it, how checkbook control works, and the simple four-step process to open your own Checkbook Control IRA with a leading custodian like IRA Financial.

1. What Is a Self-Directed IRA?

A Self-Directed IRA is an individual retirement account that allows you to invest in a far broader range of assets than a traditional or Roth IRA held at a bank or brokerage firm. While all IRAs follow the same tax rules under the Internal Revenue Code, Self-Directed IRAs differ in one crucial way.

You, not the custodian, decide what to invest in.

A Self-Directed IRA can hold:

• Real estate, including residential, commercial, and raw land
• Private equity, startups, and LLC interests
• Precious metals that meet IRS requirements
• Promissory notes and private lending
• Cryptocurrency
• Tax liens and tax deeds
• Farmland and mineral rights

The IRS does not publish a list of approved investments. Instead, it defines a short list of prohibited assets, making the Self-Directed IRA one of the most flexible retirement vehicles available.

2. Advantages of a Self-Directed IRA

Self-Directed IRAs offer two major advantages: powerful tax benefits and expanded investment flexibility.

Tax Advantages

The tax treatment mirrors that of traditional and Roth IRAs.

• Traditional Self-Directed IRA: Contributions may be tax-deductible, and earnings grow tax-deferred until withdrawal.
• Roth Self-Directed IRA: Contributions are made with after-tax dollars, and earnings grow tax-free. Qualified withdrawals are tax-free if you are over age 59½ and the Roth IRA has been open for at least five years.

When alternative assets generate income such as rent, interest, or capital gains, those profits flow back into the IRA tax-deferred or tax-free, depending on the account type.

Investment Advantages

A Self-Directed IRA offers:

• Diversification: Reduced reliance on stock market volatility
• Higher return potential: Access to private deals and real estate opportunities
• Control: Full authority over investment choices and strategy

For investors who want to take an active role in their retirement planning, a Self-Directed IRA provides unmatched flexibility.

3. Types of Self-Directed Accounts and the Power of Checkbook Control

There are several types of Self-Directed retirement accounts, including:

• Self-Directed Traditional IRA
• Self-Directed Roth IRA
• Self-Directed SEP IRA
• Self-Directed SIMPLE IRA
• Self-Directed Solo 401(k) for self-employed individuals

Among these, the most flexible structure is the Self-Directed IRA with checkbook control.

What Is Checkbook Control?

Checkbook control allows you to make investments directly, without waiting for custodian approval on every transaction. This is accomplished by forming a special purpose LLC that is owned by your IRA. You serve as the manager of the LLC.

This structure provides several key benefits.

• Limited Liability Protection: The LLC creates legal separation between your retirement assets and other activities, protecting assets held inside the LLC from liabilities unrelated to the investment.
• Greater Control: As manager of the LLC, you can write checks, send wires, and execute transactions immediately without custodian delays.
• Greater Privacy: Investments are made in the name of the LLC rather than the IRA custodian, adding an extra layer of privacy.
• Administrative Simplicity: Eliminates repeated authorization forms, transaction fees, and long processing times by allowing investments via checks or wires from the LLC account.
• Tax Efficiency: The IRA-owned LLC is a pass-through entity that does not pay federal income tax, with profits flowing back into the IRA tax-deferred or tax-free.

Single-Member vs. Multi-Member LLCs

Most investors use a single-member LLC, which is treated as a disregarded entity for tax purposes. This means the IRS ignores the LLC and treats all income as belonging directly to the IRA, resulting in no additional tax filings.

Multi-member LLCs are treated as partnerships and generally require Form 1065. These structures are useful when multiple IRAs or family members invest together but involve additional complexity and reporting.

For simplicity, speed, and cost efficiency, most investors choose a single-member LLC unless partnership investing is required.

4. How Easy It Is to Set Up a Self-Directed IRA with IRA Financial

Setting up a Self-Directed IRA used to be complicated. Today, with IRA Financial, the process is fast, streamlined, and user-friendly.

IRA Financial was founded by Adam Bergman, widely recognized as the pioneer of the checkbook control IRA structure. He literally wrote the book on Checkbook IRAs and has helped tens of thousands of investors access alternative investments inside retirement accounts.

Opening a Checkbook Control IRA with IRA Financial follows a simple four-step process.

The 4 Steps to Open a Checkbook Control IRA

Step 1: Choose Your Alternative Investment

Before opening the account, decide what type of investment you want to make. With a Self-Directed IRA, you can invest in almost anything except:

• Life insurance
• Collectibles such as art, cars, wine, rugs, or stamps
• Prohibited transactions that personally benefit you or certain family members

If an investment is not prohibited by the IRS, it can likely be held inside your IRA.

Step 2: Open Your Account Online or Through the IRA Financial App

IRA Financial makes opening an account simple.

• You can apply from your phone or computer
• The onboarding process takes about three minutes
• The IRA Financial team handles documentation and compliance

Step 3: Fund Your IRA and IRA-Owned LLC

There are three primary ways to fund a Self-Directed IRA: contributions, transfers, and rollovers.

Contributions

A contribution involves adding new money to your IRA.

2025 IRA contribution limits:

• Under age 50: $7,000
• Age 50 and older: $8,000

2026 IRA contribution limits:

• Under age 50: $7,500
• Age 50 and older: $8,600

Traditional IRA contributions may be tax-deductible depending on income and employer plan participation. Roth IRA contributions are subject to income limits.

Transfers

A transfer moves funds from one IRA custodian to another.

• Direct transfers move funds custodian to custodian and are the safest option
• No taxes or penalties
• Unlimited per year

Indirect transfers involve receiving the funds personally and redepositing them within 60 days. These are limited to once per year and carry significant risk if not handled properly.

Rollovers

Rollovers move funds from former employer plans such as:

• 401(k)
• 403(b)
• 457(b)
• Thrift Savings Plan
• Pension plans

Direct rollovers are recommended. Indirect rollovers must be redeposited within 60 days and may trigger withholding if mishandled. IRA Financial coordinates the entire funding process and sets up your special purpose LLC.

Step 4: Invest Using Checkbook Control

Once the IRA owns the LLC and the LLC bank account is funded, you are ready to invest.

You can:

• Write a check
• Send a wire
• Use an LLC debit card if applicable

Investments are executed immediately and titled in the name of the LLC, preserving all IRA protections.

Conclusion: Why Checkbook Control and IRA Financial Matter

A Self-Directed IRA with checkbook control offers:

• Maximum investment flexibility
• Greater privacy and liability protection
• Faster execution with no custodian delays
• Full checkbook authority
• Tax-advantaged growth
• Low, predictable fees

With IRA Financial, the setup process is faster and simpler than ever.

Founded by Adam Bergman, the pioneer of the checkbook control structure, IRA Financial has helped thousands of investors open compliant Self-Directed IRAs and take full control of their retirement investing.

If you are ready to invest beyond Wall Street and unlock the power of alternative assets, a Self-Directed IRA with checkbook control is one of the most powerful tools available, and IRA Financial makes it easy to get started.