Beneficial Owner Reporting and your IRA LLC
On January 1, 2024 a new federal requirement called the Corporate Transparency Act (CTA) becomes effective.
Most new and existing businesses will be required to file a Beneficial Owner Information Report (BOI report) with the Financial Crimes Enforcement Network. FinCEN is a bureau of the US Department of Treasury that investigates financial crimes.
By identifying who directly or indirectly owns or controls a business, the CTA will make it harder for criminal networks and corrupt officials to hide illicit money or property in the US.
Because this new regulation will impact self-directed investors using an IRA-owned LLC to achieve checkbook control, we wanted to address a few of the most common questions in advance of the deadline.
Will an IRA LLC need to file?
Yes. As a state registered business, a LLC owned by an IRA will need to file a BOI report.
Will a Solo 401(k) or IRA Trust need to file?
No. The Solo 401(k) trust and IRA-owned trust are not state registered business entities.
They are therefore not subject to BOI reporting requirements.
Should I close my IRA LLC to avoid reporting?
We know people are going to ask this question.
No. That would be a foolish waste of time, energy, and money.
The government already has your personal information, and your IRA is already highly regulated.
Unless you are using your IRA LLC to engage in financial crimes, you have nothing to be concerned about.
I am setting up a new plan. Should I choose an IRA trust instead of a LLC to avoid BOI reporting?
The decision whether to use an IRA LLC or IRA trust is driven by several factors such as your investment interest, the state where you reside, and the state(s) in which investments may take place.
The same factors we use today to help clients determine the best plan fit still apply, and supersede concerns about BOI reporting.
That said, many clients who may have defaulted to the IRA LLC simply because it is more widely known may wish to evaluate the IRA trust.
What is the deadline for my existing IRA LLC to file?
Existing businesses need to file an initial BOI report before January 1, 2025.
You have one full year after the filing system becomes available to submit your first filing.
What is the deadline for a new entity to file?
A new entity formed on or after January 1, 2024 will have 30 days to file an initial BOI report.
How soon can I file my report?
The filing system is not yet available. FinCEN will begin accepting BOI reports on January 1, 2024.
What company information is required on the BOI report?
The following information about the company is required:
- Legal name of the company
- Any trade names associated with the business
- A current street address within the US that serves as the principal place of business
- The jurisdiction of formation
- The tax ID (EIN) of the business
What information is required for a company’s beneficial owner(s)?
In the case of an IRA LLC, the IRA account holder is considered the beneficial owner. The following will need to be provided:
- The individual’s legal name
- Date of birth
- Residential address
- An acceptable identification document such as a passport or US driver’s license
I read that tax-exempt entities do not have to file. Why does my IRA LLC have to file?
While the IRA owned LLC passes its income to a tax-sheltered IRA, it does not meet the formal definition of a tax-exempt entity.
To be exempt from BOI reporting requirements, the entity itself would need to be a church, charity, non-profit, or political organization exempted under Section 501(c)(3) or Section 527 of the tax code.
The BOI exemption stems from the fact that such organizations are already subject to filing and reporting obligations that make BOI reporting unnecessary.
Will Safeguard Advisors file my BOI report?
We have not made a determination, as we do not yet have access to the reporting system from FinCEN.
You will have the option to self-file, and we will certainly provide further guidance once the filing system becomes available.
We may choose to identify one or more reliable 3rd party services for those people who choose not to self-file.
What is the cost to file a BOI report?
There is no fee for self-filing.
What happens if I don’t file?
Failure to file can result in significant penalties. You can be charged $500 for every day you fail to file, (up to $10,000), imprisoned for up to two years, or both.
Where can I learn more?
If you want to take a deeper dive, feel free to visit https://www.fincen.gov/boi
When can I expect more information from Safeguard Advisors?
This article covers all we currently know about this topic.
As more details become available from FinCEN, we will update this page and include anything significant in our monthly newsletter.
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Quick answers to common questions
We’ll take you through a simple, step by step process designed to put your investment future into your own hands…immediately. Everything is handled on a turn-key basis. You take 100% control of your Retirement funds legally and without a taxable distribution.
YES! In 1974, Congress passed the Employee Retirement Income Security Act (ERISA) making IRA, 401(k) and other retirement plans possible. Only two types of investments are excluded under ERISA and IRS Codes: Life Insurance Contracts and Collectibles (art, jewelry, etc.). Everything else is fair game. IRS CodeSec. 401 IRC 408(a) (3)
It’s actually pretty simple. Early on, regulators let the securities industry take the lead in educating the public about retirement accounts. Naturally, brokers and banks promoted stocks, bonds, and mutual funds—giving the impression that those were the only allowed investments. That was never true... and still isn’t. You can probably guess why they kept the rest under wraps.
It is possible to use funds from most types of retirement accounts:
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Keogh
- 401(k)
- 403(b)
- Profit Sharing Plans
- Qualified Annuities
- Money Purchase Plans
- and many more.
It must be noted that most employer sponsored plans such as a 401(k) will not allow you to roll youraccount into a new Self-Directed IRA plan while you are still employed. However, some employers will allow you to roll a portion of your funds. The only way to be completely sure whether your funds are eligible for a rollover is by contacting your current 401(k) provider.
A Solo 401(k) requires a sponsoring employer in the format of an owner-only business. If you have a for-profit business activity – whether as your main income or as a side venture – and have no full-time employees other than potentially your spouse, your business may qualify. The business may be a sole-proprietorship, LLC, corporation or other entity type.
A self-directed retirement plan is a type of IRA or 401(k) that gives you greater control over how your retirement funds are invested. Unlike traditional accounts held at banks or brokerage firms that limit you to stocks, bonds, and mutual funds, self-directed plans allow you to invest in a wide range of alternative assets including real estate, private businesses, precious metals, cryptocurrency, and more.
These plans still follow the same IRS rules and maintain the same tax-deferred or tax-free benefits as conventional retirement accounts. The difference is simply in how and where you choose to invest.
No. Moving to a self-directed IRA or Solo 401(k) does not trigger any taxes, as long as your funds are eligible for rollover.
Self-directed retirement plans maintain the same tax-advantaged status as traditional plans offered by banks or brokerage firms. The key difference is flexibility—our plans are designed to give you greater control and allow for a wider range of alternative investments beyond stocks, bonds, and mutual funds.
A prohibited transaction is any action between your retirement plan and a disqualified person that violates IRS rules and can lead to serious tax consequences. Under IRS Code 4975(c)(1), prohibited transactions include:
- Selling or leasing property between your plan and a disqualified person Example: Your IRA cannot purchase a property you already own.
- Lending money or extending credit between the plan and a disqualified person Example: You cannot personally guarantee a loan your IRA uses to buy real estate.
- Providing goods or services between your plan and a disqualified person Example: You can’t use your personal furniture to furnish a rental property owned by your IRA.
- Using plan income or assets for the benefit of a disqualified person Example: Your IRA cannot buy a vacation home that you or your family use.
- Self-dealing by a fiduciary (using plan assets for their own benefit) Example: Your CPA shouldn't loan your IRA money if they’re advising the plan.
- Receiving personal benefit from a deal involving your IRA's assets Example: You can’t pay yourself from profits your IRA earns on a rental.
If a transaction doesn’t clearly fall within the allowed guidelines, the IRS or Department of Labor may review the situation to determine if it qualifies as a prohibited transaction.
Disqualified persons are individuals or entities that are prohibited from engaging in certain transactions with your IRA or 401(k). Doing so could trigger a prohibited transaction, which may result in taxes and penalties.
Here’s who is considered a disqualified person:
- You (the account holder)
- Your spouse
- Your parents, grandparents, and other ancestors
- Your children, grandchildren, and their spouses
- Any advisor or fiduciary to the plan
- Any business or entity owned 50% or more by you or another disqualified person, or where you have decision-making authority
These rules exist to prevent self-dealing and ensure your retirement plan remains in compliance with IRS regulations.
(Reference: IRC 4975)
Understanding and following these rules can be tricky, but it’s very doable. The best way to stay compliant is to work with professionals who specialize in self-directed retirement plans. They can help you navigate IRS guidelines and avoid prohibited transactions.
If an IRA holder is found to have engaged in a prohibited transaction with IRA funds, it will result in a distribution of the IRA. The taxes and penalties are severe and are applicable to all of the IRA’s assets on the first day of the year in which the prohibited transaction occurred.
Yes. While self-directed retirement plans allow for a wide range of investments, there are a few important restrictions.
You cannot invest in collectibles or life insurance contracts, and you must avoid prohibited transactions—activities that benefit you personally rather than the retirement plan. These include things like buying or selling property to yourself or family members, using plan assets for personal gain, or self-dealing in any way.
Violating these rules could cause your entire IRA to lose its tax-advantaged status. To protect your account, it’s essential to work with professionals who understand IRS regulations and can help you stay compliant.
This is a common misconception. In many cases, professionals may simply be unfamiliar with self-directed retirement plans, as they fall outside their usual scope of work. CPAs and tax preparers are trained to file taxes, not necessarily to advise on alternative retirement strategies. Financial advisors and brokers often work for firms that focus on traditional investments like stocks and mutual funds—and may not benefit from or support alternative options like real estate or private lending.
Self-directed retirement investing is legal under IRS rules—but like any specialized area, it requires working with professionals who understand how it works.
The IRS has rules in place to make sure your IRA is used only for the exclusive benefit of the retirement account—not for personal gain or to help family members. These rules can get complicated because there are many ways a conflict of interest can occur, even unintentionally.
For example, if your IRA buys a house and rents it to your mother, you might be reluctant to evict her if she stops paying rent. That emotional connection creates a conflict between what’s best for your IRA and your personal relationships, something the IRS aims to prevent.
These rules help ensure your retirement account stays compliant and protected. (See IRC 408)
Yes. Most tax-deferred retirement accounts—such as Traditional IRAs, old 401(k)s, 403(b)s, and TSPs—can be rolled over into a self-directed IRA or Solo 401(k), depending on your eligibility. Roth IRAs cannot be rolled into these accounts.
You can contribute directly from earned income, subject to annual IRS contribution limits. The method and amount depend on the type of plan you have (e.g., Solo 401(k) vs. IRA).
To take a distribution, you'll request funds through your custodian or plan administrator. Distributions may be taxable depending on your account type and age. Early withdrawals may be subject to penalties.
For 2025, the Solo 401(k) max contribution limit is $81,250 if age 60-63, $77,500 if age 50-59 or 69+, and $70,000 if under 50. Traditional and Roth IRAs have a limit of $7,000 ($8,000 if age 50+). Limits are subject to IRS adjustments.
Yes. IRA contributions are typically due by your personal tax filing deadline (e.g., April 15). Solo 401(k) contributions follow your business tax filing deadline, including extensions.
IRS reporting requirements vary depending on the type of self-directed retirement plan you have. Here’s a quick breakdown of what you need to know
Please note: Our team can help you understand what’s required for your specific account, but we don’t provide tax or legal advice. We always recommend working with a qualified tax professional to ensure full IRS compliance.
Self-Directed IRA (Traditional or Roth)
- Form 5498 – Filed by your custodian each year to report contributions, rollovers, and the fair market value (FMV) of your account.
- Form 1099-R – Issued if you take a distribution or move funds out of your IRA.
- Annual Valuation – You'll need to provide updated FMV for any alternative assets held in the account, such as real estate or private placements.
Solo 401(k)
- Form 5500-EZ – Required if your plan assets exceed $250,000 as of year-end. Must be filed annually by the plan participant.
- Form 1099-R – Required if you take a distribution or roll funds out of the plan.
- Contribution Tracking – Keep records of employee and employer contributions. These are not filed with the IRS but may be needed for tax reporting or audits.
SEP IRA
- Form 5498 – Filed by your custodian to report contributions and FMV.
- Form 1099-R – Filed by your custodian. Issued for any distributions.
- Employer Contributions – Must be reported on your business tax return (and on employee W-2s, if applicable).
Health Savings Account (HSA)
- Form 5498-SA – Filed by your HSA custodian to report contributions.
- Form 1099-SA – Filed by your HAS custodian. Issued for any distributions.
- Form 8889 – Must be included with your personal tax return to report contributions, distributions, and how funds were used.
