4 ms·
On the flip side what is to stop people from setting up an llc and have their ira own the llc and shunt all their income into the llc to avoid paying any tax?
by fspeech 5y ago
On the flip side what is to stop people from setting up an llc and have their ira own the llc and shunt all their income into the llc to avoid paying any tax?
- wtf_larper 5y agoYou won't be able to access any of the money until 65 years of age, after retirement. And if it's a traditional IRA account, you'll pay taxes on them on withdrawal. For Roth, there is an annual CAP ($6000 for 2021) on how much you can put into the account/LLC. You've already paid taxes on the money you've put into Roth. The whole point of Roth is so that you get tax-free gains so that when you withdraw at retirement, you don't have to pay taxes again.
- fspeech 5y agoI don't think it necessarily works that way. You contribute illiquid llc units to the ira. The value of the contribution is up to you since it is not traded. You distribute taxable income to the ira through the llc, but no actual cash needs to be distributed. There is no cap on the amount of income you can distribute because it is return on capital, not new contribution therefore not suject to the contribution limit. The actual cash is still in the llc under your control.
- deleted 5y ago[deleted]