So it appears that the IRS has made a new rule about Limited Liability Corporations (LLCs) to limit your options to shift your savings/investment dollars overseas. If this signaling the beginning of the federal government working to get tighter control of YOUR money to suit its own ends? This is not unprecedented, and any claims of “but this can’t happen here” I’d offer is naive.
You be the judge.
One of the best solutions over the past few years, particularly for IRA account holders, was to set up a special type of self-directed IRA.
In this structure, your IRA exclusively owns a domestic LLC, and you as the IRA account holder become the manager of the LLC.
This gives you the authority to directly manage your retirement funds, allowing you a lot of flexibility to ship your savings overseas, invest in foreign real estate, etc. as long as you stay away from a clear set of ‘prohibited transactions’ that the IRS outlines.
These IRA structures are incredibly flexible, and I think one of the best ways for people to safeguard what they’ve worked their entire lives to build.
So here’s the disturbing news… and it’s something you won’t hear about anywhere else.
One of the attorneys that I work with routinely has specialized in setting up these types of structures. He’s an accomplished tax professional with decades of experience under his belt, and he recently told me that the IRS is no longer ‘allowing’ this type of structure.
More specifically, the IRS is refusing to issue tax ID numbers for single-member LLCs that are owned by an IRA… which is the specific structure that US taxpayers need to create in order to ship their retirement savings overseas. Of course, no LAW has been passed. No vote has been conducted. The IRS simply decided by policy in its sole discretion to stop allowing Americans to create this structure, and hence, force them to keep their retirement savings in the US.
[youtube height=”315″ width=”560″]http://www.youtube.com/watch?v=jJq0G4yr_K4[/youtube]