How to Move a Checkbook IRA to New Custodian
The great thing about a checkbook IRA is that it puts you in direct control of all investment transactions. This is accomplished with a two-layered structure involving an IRA with a specialty “self-directed” IRA custodian that then invests into a…
The great thing about a checkbook IRA is that it puts you in direct control of all investment transactions. This is accomplished with a two-layered structure involving an IRA with a specialty “self-directed” IRA custodian that then invests into a legal entity like a LLC or Trust that you can control and use to make investments.
While a lot of people think that a checkbook control IRA eliminates the IRA custodian, that is not the case. The role of the IRA is minimized, but the custodian is still necessary for the administration of your tax-sheltered IRA.
There are cases where it may make sense to change the IRA custodian for your IRA LLC or IRA trust entity. Maybe the quality of service at your current institution has declined, or perhaps the fees have increased to be out of step with the industry.
It is possible to change your IRA custodian without needing to alter your plan investments.
The Role of the Custodian
All IRA plans must be held by a registered custodian. This may be a bank, trust company, or brokerage firm.
The core services of all IRA custodians are the same. They hold the account, document plan beneficiaries, perform annual reporting, process IRA layer transactions like contributions, distributions, and rollover, and lastly, process and record investments made with the IRA.
A self-directed custodian is unique when it comes to that last piece, the investments of the IRA.
Unlike mainstream financial institutions that only offer conventional investments like stocks, bonds, funds, and CD’s, self-directed custodians have the capacity to document more unique, non-traditional assets. A self-directed IRA can be invested in real estate, startups, non-traded funds, and cryptocurrency.
Custodian vs Checkbook Control
In a plan without checkbook control, you are reliant on the custodian to process all transactions for your plan. This involves submitting a request into the processing queue for the custodian to sign off on and fund the transaction.
For a portfolio with a few static assets that can work fine, but if you have a large portfolio or want to invest in transaction-intensive assets like real estate or tax liens, then relying on the custodian can become cumbersome and expensive.
To obtain checkbook control, you will have the IRA make one investment into a specially formed LLC or trust entity. The custodian then sits in the background and handles account administration and reporting. You can then use the LLC or trust to directly manage all plan investments. You can act immediately when necessary and eliminate a variety of transaction based or asset-based fees that are typically charged by the custodian. The custodian is only holding the one LLC/trust asset.
Safeguard Advisors specializes in creating and supporting these types of IRA-owned LLC and trust entities.
Keep the Checkbook, Change the Custodian
If the IRA custodian that holds your checkbook IRA is no longer your best option due to service level or cost, you can transfer the IRA-owned LLC or trust to another institution.
The investments within your LLC/trust are not impacted by this move. It is kind of like moving a safe from one room to another without needing to open the safe.
Steps to Transfer to a New Custodian
Transferring your checkbook entity to a new custodian involves the following steps:
- Setup an IRA with the new custodian.
- Ensure your existing IRA is current on fees and entity valuation.
- Amend your LLC/trust document to show the new custodian FBO your IRA as the LLC member or trust grantor/beneficiary.
- Submit transfer in-kind paperwork to the new custodian. They will forward the request to the resigning custodian.
- Execute re-registration paperwork with the new custodian to complete the transfer process.
Timing and Transition
Depending on your level of engagement and the responsiveness of your resigning custodian the process can take anywhere from 4 to 8 weeks to complete.
You can continue to make and manage investments within your LLC or trust during this time.
When Does it Make Sense to Change?
It takes time and effort to switch, and there will be costs associated with the transfer process. The costs will vary depending on your situation, but are typically between $300 and $700 for services to facilitate the change and account closure fees with the current custodian.
So, there needs to be a meaningful benefit to justify making a switch.
If your new custodian will save you a few hundred dollars a year in fees the payback can be easy to see.
If the service level of your current custodian is not what it once was, then you need to determine if higher quality service is worth the cost of a transfer. In some cases it very well may be.
If you intend to continue operating your plan for many years, the cost of transition can be relatively insignificant compared to future cost savings or better customer service.
Sometimes a receiving custodian will offer a promotion to reduce the cost of transfer.
Safeguard Can Help
Safeguard Advisors uses Solera National Bank as our partner custodian. Having been in this industry since 2005, we have seen a lot of different custodians. Solera is a real winner.
Solera’s service is friendly and responsive, and their fees are very competitive. Because Solera is both an IRA custodian and a bank, you have the opportunity to unify your financial services with one team. That can simplify your operations, reduce transaction costs, and improve the quality of service you can expect. You can also choose to keep an existing LLC bank account if you want to.
If you are an existing Safeguard Advisors client with a legacy custodian we worked with in the past and want to change, we can streamline many of the processes since we already have your information and plan documents.
If you are not a current client of Safeguard and want to move your checkbook IRA to Solera, we have a program designed for that purpose too.
In the last few years, we have helped hundreds of investors upgrade their checkbook IRA custodian to Solera Bank, save on fees, and improve the customer service for their plan.
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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.
