Achieve Your New Year’s Financial Resolution with Check Book IRA®

I simply cannot believe how fast a year has gone by! And before you know it, the first week of 2017 is becoming history. I hope you have accomplished all the goals you set at the beginning of 2016. As for me, I believe I have met the big goal of learning to sell on Amazon in 2016.  However, the online selling business is by no mean a success. So one of the goals for 2017 is to continue to put more effort into learning and growing the business.

Another goal I set for the new year is to diversify my retirement plan investment. First of all, let’s be clear that I am not a financial planning expert; anything I discuss here is my personal opinion after listening to real estate investing podcasts. With that said, I currently have a 401k plan which I participate at the company I hold a full-time job with. I also have a Roth IRA which I rolled over from a previous employer’s 401k. I would say one of the few reasons you should participate in your company’s 401k is for the benefit of the employer’s match to your contribution which is sort of a guaranteed return. Your maximum 401k contribution should be up to the maximum employer’s match percentage.

The other benefit of your employer sponsor 401k is the ability to get a loan from your 401k plan. You can borrow up to 50% of the plan value up to $50k. You can use the loan toward purchasing your primary home, the loan payback term can be up to 20 years for this purpose. Or you can request a general loan, however, the loan payback term is the maximum of 5 years. You will be charged a loan interest which I believe is reasonable. You can find out more information on your 401k plan from your plan administrator’s website. Other than the benefits stated above there are far better retirement plan options available which I learned recently.

Right now my main concern is with my Roth IRA, which I have with Scottrade and it’s all invested in the stock market.  I want more diversification in investment option and direct control in decision making which I didn’t know possible until I listened to some financial investing podcasts. I actually contacted two companies I learned about from podcasts.  One of them offer what’s called the eQRP – Qualified Retired Plan, the other offers the “Solo 401k” and the “Checkbook IRA”. After reading the downloaded e-books and some discussion over the phone, I believe the Checkbook IRA is suitable for my situation, but I still have some doubts on how the Checkbook IRA works & I emailed that company back, but have not received any response, so I did a Google search and clicked on the first search result, which is from I found this website is very well organized and explains the Check Book IRA & the Sole 401k retirement plans in an easy to understand fashion. By the way, they actually came up with the name Check Book IRA® and own the Federal trademark which is why that’s name of their company.

What also impressed me the most is how responsive the support they provided and they are from the highest level of the company staff as well. The company president Peter  F. Rizzo is the first to contact me via the chat feature on the website and he called me right away since there are topics can’t be easily explained on chat. Since I really have limited knowledge of retirement investment plans, I asked a lot of questions over the next two days via chat & email.  Jordan Sheppherd, the CEO of the company also stepped in answering my questions when Peter Rizzo is not available.

According to Jordan Sheppherd: “More and more people are beginning to see the advantage of diversifying their retirement money into real estate and other investments outside the stock market.  Considering that this has been possible since retirement accounts came into existence, and given the fact that a number of structures exist which give a person complete control over their retirement funds to invest in what they know, it’s not surprising that this has become more popular as more people learn this is a possibility.”

“The Solo 401(k) is an especially powerful structure.  If retirement structures were cars, the Solo 401(k) would certainly be the Rolls Royce.  It’s so easy for a person to qualify to set up a Solo 401(k), in my opinion, everyone should have one.”

In my situation, since I have a Roth IRA, the best option could be to roll over/transfer to a Check Book IRA. IRAs can’t be rolled over to a 401k plan. I am pretty sure I can’t touch my Work 401k, otherwise I would definitely roll it over to a Checkbook IRA or a Solo 401k.

How the Check Book IRA works is that you register an LLC in your state or other states of your choice, which I later found very intriguing and why I ended up not having the Check Book IRA but still endorse their service. You then make yourself of the LLC manager, open a business checking account in the name of the LLC, which basically giving you the check book control of your IRA investment fund. This will open up a whole lot more choices in what you can invest in, such as real estate, precious metal, tax liens…etc. And you don’t have to go through the custodian like the self-directed IRA to get the approval when making an investment decision and save the fee you have to pay them as well.

They recommend registering the LLC in New Mexico which does not charge an annual LLC tax like other states. Since I live in California, I have to pay the annual $800 LLC tax and I first thought that I can avoid the tax by registering the LLC in New Mexico, but it turns out that California still charges the $800 LLC tax even if the LLC is registered with another state. However, if you don’t live in California, your state may not charge the tax, you need to check with your state, but even if your state charges the LLC tax, I am sure it will be a lot lower than that of California. I decided to cancel the Check Book IRA application after they confirmed with me about the California LLC tax. The cancellation went very smooth and with no hassle, the support staffs from Check Book IRA and their IRA custodian company Kingdom Trust are very friendly and efficient.

For the amount of fund I have in my Roth IRA, I don’t see paying California the hefty LLC tax is worth it at this point.  And since I only have one specific real estate investment in mind, the self-directed IRA is sufficient for the purpose. But keep in mind that you don’t have the check book control with the self-directed IRA, every transaction needs to go through the self-directed IRA custodian instead and get charged a fee on every transaction.

What I will do is to sell some stocks from my Roth IRA, transfer that fund to the new self-directed IRA. One advantage of the self-directed IRA is it has a lot more investment choice than the regular IRA, the Roth IRA I have can only invest in the stock market.

When comparing with all the retirement plan options available, I believe the Solo 401k is the best choice for control, flexibility and cost effectiveness. I will certainly consider opening a Solo 401k plan with “Check Book IRA” later on.

I strongly encourage you to check out and find out their Check Book IRA and Solo 401(k) services. By the way, I found out their plan fee is actually lower than the other company I contacted prior to them. Also, I do not get any compensation from Check Book IRA by endorsing them here. I recommend them solely by being impressed with their offers and services.

As mentioned earlier, I am not a financial planning expert, please consult with your CPA or financial planner before making any investment decisions.


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