IRA Financial Group Celebrates 19th Anniversary of IRS Validation of Self-Directed IRA Structure

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It has been almost 19 years since the IRS formally accepted the concept of using a newly established entity owned by an IRA to make investments

IRA Financial Group - Self-Directed IRA

The Swanson case is the first time that the IRS publically signaled its position that using an IRA to invest through a newly established entity is not a prohibited transaction

IRA Financial Group, the leading provider of “checkbook control Self-Directed IRA LLC solutions, is proud to celebrate the 19th anniversary of the recognition and validation of the Self-Directed IRA LLC structure by the IRS. The concept of using an entity owned by an IRA to make an investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). The underlying facts involved James Swanson (the taxpayer’s) combined use of two entities owned exclusively by his IRAs to defer income recognition. The IRS argued that the Swanson IRA transaction was a tax avoidance scheme. After careful review of the concept of using a newly established entity owned wholly by an IRA and managed by the IRA holder, the IRS conceded the prohibited transaction issue in 1993 when it filed a notice of no objection to an earlier motion by the Swansons for partial summary judgment on that issue. “The Swanson case is the first time that the IRS publically signaled its position that using an IRA to invest through a newly established entity is not a prohibited transaction, “ Stated, Adam Bergman, a tax attorney at the IRA Financial Group. “After Swanson, more and more people started looking at the Self-Directed IRA LLC as a means of making investments using retirement funds, “ stated Mr. Bergman.

The Swanson Case highlighted the potential for using a newly established entity to make retirement funds on a tax-deferred basis. As a result, thousands of investors turned to this structure as a means of making non-traditional investments using retirement funds. Accordingly, the IRS felt it was important to provide some guidance to its agents about the IRS’s position on the use of a newly established entity wholly owned by an IRA to make investments. Hence, the IRS release Field Service Advice Memorandum (FSA) 200128011.
In FSA 200128011, the IRS, in providing guidance to IRS agents for purposes of conducting audits, confirmed the Tax Court’s holding in Swanson and held that a newly established entity owned by an IRA and managed by the IRA owner may make investments using IRA funds without violating the prohibited transaction rules under Internal Revenue Code Section 4975.
In light of Swanson and FSA 200128011, the tax attorneys at the IRA Financial Group have developed a truly self directed IRA LLC “checkbook control” solution.

IRA Financial Group’s true self directed IRA LLC solution involves the establishment of a limited liability company (“LLC”) that is owned by the IRA (care of the IRA custodian) and managed by the IRA holder or any third-party. As manager of the IRA LLC, the IRA holder will have control over the IRA assets to make real estate and other investments tax-free and without custodian consent.     

With IRA Financial Group’s self directed IRA LLC, investors never have to seek the consent of a custodian to make an investment or be subject to excessive custodian account fees based on account value and per transaction. “The beauty of IRA Financial Group’s truly Self-Directed IRA with “checkbook” control is the luxury of complete freedom to invest your hard earned retirement funds the way you want to, without custodian consent or delays in process time and additional fees,” says Scott Krokoff, a tax attorney with the IRA Financial Group.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP and Dewey & LeBoeuf LLP.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Jaclyn Baily