California Residents with a Self-Directed IRA. How should I structure it and what are the fees?

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California residents can choose a Self-Directed IRA with or without an LLC. A Self-Directed Solo 401(k) does not need to register with the Secretary of State or the Franchise Tax Board.

 

California residents can contact Rocket Dollar for a Self-Directed custodial IRA without an LLC. 

You have the option to choose a plan that best fits your investment needs. Silver plans consist of a one-time setup fee of $360 and $15 a month, and our Gold plan consists of a $600 one-time setup fee and $30 a month. Please contact our sales team if you aren't sure which structure is best for you at 1-855-762-5383 Monday through Friday from 9:00 am to 4:30 pm CT. This structure could have additional requirements for final deal approval and forgo the benefits of having checkbook control with an LLC, however, it does avoid additional LLC fees from the California state government.

 

Can I buy a Rocket Dollar with direct custody at Silver pricing for $360 and $15/month?

Our Direct Custody product is now live for all customers opening new Traditional or Roth IRA accounts as of March 2022.

How does the pricing compare for my options?

  • $360 Silver account signup (one time)
  • $15 per month compliance fee

IRA LLC for a California Resident

  • $360 Silver account signup (one time)
  • $15 per month compliance fee
  • $800 minimum each year paid to California (please check with the California Franchise Tax Board for the exact amount) Note: an LLC from outside California typically still incurs the FTB fees. 
  • $70 one time fee to register your Rocket Dollar Colorado IRA LLC as a foreign entity in California (please check with the California Secretary of State's Office for the exact amount)California IRA Flow Multiple Investments Diagram (1)

What reporting requirements will I need to do for my LLC?

  • California has significant reporting requirements and will send notice even for an out-of-state LLC managed by a resident in the state of California.
  • Initial Registration on the Secretary of State Website $70
  • Statement of Information (every 2 years) $20 fee
  • Annual LLC Franchise Tax (every year) $800 unless exempted by COVID relief, like the first year until 2023.
  • Estimated Fee for LLCs (every year) but only if your LLC receives an income of over $250,000 a year
  • LLC Return of Income (every year) The LLC is usually a disregarded entity for state tax purposes. 
  • Please review all reporting requirements with a California experienced CPA if you need extra help. California requirements can change at any time at the California Gov website.

I think I can avoid this $800 fee...

Can the franchise tax board really reach out to business activity out of state, if I'm investing out of state? California's Franchise Tax Board has surprisingly far-reaching law and authority. They have backed this up in numerous court cases. Other states and legal experts have questioned this authority, but so far it has held up in California high courts over numerous cases.

What if I open an IRA with a trust? After consulting our legal teams, an IRA with a trust does not have nearly the same amount of case law to support it compared to the IRA LLC, which has several prominent and landmark cases to support do's and don'ts inside of a Self-Directed/ Checkbook IRA LLC. We offer an IRA LLC, Solo 401(k) using a trust, and a direct custody IRA without an LLC below.  

What if I just don't want to pay for it? This might not be the account for you. The California Franchise Tax Board can and will pursue those that do not pay or do not submit reporting.

 

Direct Custody IRA Option (without an LLC)

(Fees updated January 2022)

  • $360 Silver account signup fee (one time) $15 per month compliance fee.
  • $600 Gold account signup fee (one time) $30 per month compliance fee.
    • The Gold account covers four wires per year.
    • Premium support and expedited transfers.
  • Assets our custody partner will not approve:
    • Cryptocurrency
    • SAFE Notes
    • International Investments
    • Any direct personal loans to another individual
    • Any non-passive investments 

Direct Custody Flow V2 Black KB

Additional fees you may incur with the custodian:

IRAR_fees.png

 

I'm ready to get started with direct custody. What's next?

  1. Sign up for a Rocket Dollar IRA at rocketdollar.com/signup
  2. Select DIRECT CUSTODY account for either $360 and $15 a month or $600 and $30 a month.

What is the timeline?

With a deal review, even with a Gold Account, the Direct Asset could take up to 3 weeks. 

 

Can I still purchase an asset?

Keep in mind that you will have to complete a deal review with our custody partner if you choose a direct custody IRA. Because our custody partner has custody of the asset they can decide if they will accept the investment or not.

Currently, at this time, our custody partner is not accepting deal reviews for Cryptocurrency and will not hold those investments. You would need to use our LLC product.

If you still want to purchase crypto, you can always do so in California but at this time must pay the $800 yearly franchise board tax fee and register the Colorado LLC that Rocket Dollar would open for you. We are continuing to work on solutions for Crypto investors.

 

What about a Self-Directed Solo 401(k)?

A Self-Directed Solo 401(k) is a trust, not an LLC, and thus the extra LLC considerations do not apply. California residents can enjoy the same Rocket Dollar Silver $360 signup and $15 per month fee, with no new investment fees. This can be a great alternative if you qualify.

 

Sign up now

 

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