Checkbook IRA LLC and Gold: What to Know
A checkbook IRA LLC lets an IRA own a limited liability company that you manage, so you can buy assets by writing checks from the LLC account. For physical gold, this structure carries real tax risk: in McNulty v. Commissioner (2021), the U.S. Tax Court treated coins bought through IRA-owned LLCs and kept at home as taxable distributions. That is why most metals IRA owners use a custodian and an approved depository instead.
How the Structure Works
In a checkbook arrangement, a self-directed IRA custodian holds the IRA, and the IRA becomes the sole member of a newly formed LLC. The IRA owner is usually named manager of the LLC. The LLC opens its own bank account, and the IRA owner can then sign checks or wire funds without asking the custodian to approve each purchase.
Promoters describe this as "checkbook control." It is popular for real estate and private placements because it can speed up transactions and reduce per-transaction custodian fees. Nothing in the tax code bans an IRA from owning an LLC. The problems come from what the IRA owner does with that control, and with physical metals, the problems are sharper.
Why Gold Is Different
Most assets an IRA might hold through an LLC are not "collectibles" under the tax code. Gold and silver coins are. Internal Revenue Code section 408(m) says that if an IRA acquires a collectible, the cost is treated as a distribution. The law then carves out exceptions for certain coins and for bullion that meets fineness standards, but the bullion exception comes with a condition: the metal must be in the physical possession of a trustee, meaning a bank or an IRS-approved nonbank trustee. You can read the statute at Cornell's Legal Information Institute, and our page on the collectibles rule explains it in more depth.
When an LLC manager keeps coins in a home safe, a personal safe deposit box or a desk drawer, the metal is not in a trustee's possession. That is the core risk.
What Happened in the McNulty Case
In McNulty v. Commissioner, decided by the U.S. Tax Court in 2021, a married couple each set up a self-directed IRA that owned an LLC. The LLCs bought American Eagle coins, and the coins were shipped to and kept at the couple's home. The court held that taking physical possession of the coins counted as taxable distributions from the IRAs, and it upheld accuracy-related penalties as well.
Key takeaways from the decision:
- The court rejected the idea that an IRA owner acting as LLC manager is the same as a qualified trustee holding the metal.
- Promoter assurances that home storage was legal did not protect the taxpayers from penalties.
- The ruling focused on control and possession. Owning the coins through an LLC did not change the outcome.
Our separate guide to home storage gold IRA risks covers the marketing claims you may still see.
Prohibited Transaction Danger
Even apart from storage, checkbook control puts the IRA owner in a position to make mistakes the custodian would normally catch. The IRS lists actions that count as prohibited transactions, such as selling property to the IRA, using IRA assets for personal benefit, or buying from a disqualified person like a spouse or child. If an IRA owner engages in a prohibited transaction, the IRS says the account generally stops being an IRA as of the first day of that year, and the entire account is treated as distributed at fair market value.
Examples of how this can go wrong with metals in an LLC:
- Buying coins from your own personal collection for the LLC.
- Using LLC funds to pay for a home safe or home security system.
- Pledging LLC-held metal as collateral for a personal loan.
- Paying yourself a management fee from the LLC.
Why Most People Use a Custodian and Depository
The conventional setup splits roles. A custodian holds the IRA and keeps records. A dealer sells the metal. An independent depository stores it and reports holdings. The IRA owner chooses what to buy but never takes possession while the metal is in the account.
This approach costs custodian and storage fees and is slower than writing a check. In exchange, it keeps the metal clearly in a trustee's or approved depository's possession, creates a paper trail, and puts a third party between you and many prohibited-transaction errors.
How Goldco Handles Storage
Goldco, a precious metals company, says metals bought for IRAs go to an independent insured depository and that it works with all major self-directed IRA custodians. It does not describe an LLC or home storage arrangement for IRA metals. Its precious metals specialists are not licensed to give tax or legal advice. See our Goldco storage and custodians page for details.
Frequently Asked Questions
Is a checkbook LLC illegal?
No. An IRA can own an LLC. The risk comes from how assets are held and used. With physical metals, home or personal possession is the main issue the Tax Court addressed.
Can the LLC store gold at a depository instead?
Some structures try this, but the statute refers to possession by a trustee. Because the rules are technical, get advice from a qualified tax attorney before relying on any LLC storage arrangement.
Did McNulty involve non-American Eagle coins?
The coins in the case were American Eagles, which are specifically allowed in IRAs. The problem was possession, not coin eligibility.
What does a disqualified person mean?
Under IRS rules it includes you, your spouse, your ancestors and lineal descendants and their spouses, and fiduciaries of the account, among others.