Self-Directed IRA LLC Operating Agreement: What You Need (2026)
Essential provisions, state requirements, and template guidance for your IRA LLC operating agreement to maintain compliance.
Key Takeaways
- 1Operating agreement is legally required for LLC formation
- 2Must specify IRA as 100% owner, you as manager only
- 3Key provisions: ownership structure, manager powers, prohibited transactions
- 4State law affects specific requirements (Wyoming, Delaware, Nevada popular)
- 5Template from checkbook IRA provider is best starting point
- 6Customization by attorney recommended for complex situations
What Is an Operating Agreement?
An operating agreement is the foundational legal document for your IRA LLC:
- Defines ownership structure (IRA owns 100%)
- Specifies management (you as manager)
- Outlines powers and limitations
- Governs distributions and transfers
- Addresses dissolution and succession
- Required by most states for LLC formation
- Not filed with state (internal document)
- Banks require it to open LLC account
Why It Matters
Your operating agreement is your defense in an IRS audit. It proves the proper structure: IRA ownership, your role as manager (not owner), and compliance with prohibited transaction rules. Without it, the IRS can challenge your entire IRA structure.
Key Provisions Required in IRA LLC Operating Agreement
These elements are essential for IRS compliance:
- Member designation: "[Your IRA name] FBO [Your name]" as 100% owner
- Manager designation: You (or another person) as manager with no ownership
- Ownership percentage: Explicitly state IRA owns 100%, manager owns 0%
- Manager powers: Authority to make investments, sign contracts, open accounts
- Prohibited transactions clause: Reference to IRC 4975 restrictions
- Distributions: Only to IRA member, not to manager personally
- Disqualified persons: Cannot transact with you, family, or entities you control
- Succession: What happens if manager dies or is incapacitated
| Provision | What It Must Say | Why It Matters |
|---|---|---|
| Ownership | IRA is 100% owner | Proves no personal ownership |
| Management | You are manager, not owner | Shows control without ownership |
| Powers | Manager can invest, sign, transact | Authority to act for LLC |
| Distributions | Only to IRA member | Prevents personal benefit |
| Prohibited transactions | References IRC 4975 | IRS compliance |
| Succession | Who manages if you die | IRA doesn't freeze |
State-Specific Requirements
Different states have varying requirements for LLC operating agreements:
- Wyoming: Popular for asset protection, no state income tax, annual fee $60
- Delaware: Strong LLC laws, court system favors business, annual tax $300
- Nevada: No state income tax, privacy protection, annual fee $350
- South Dakota: No state income tax, strong asset protection, annual fee $50
- Your home state: May be required if property is in your state
- Most states: Do not require filing operating agreement with state
- California, New York: Higher annual fees ($800+ in CA), consider avoiding
- Operating agreement governs even if not filed publicly
| State | Annual Fee | Income Tax | Best For |
|---|---|---|---|
| Wyoming | $60 | None | Low cost, asset protection |
| Delaware | $300 | None on out-of-state | Strong legal framework |
| Nevada | $350 | None | Privacy protection |
| South Dakota | $50 | None | Lowest cost option |
| California | $800+ | 8.84% | Avoid if possible |
| New York | $400+ | 6.5% | Avoid if possible |
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Common Mistakes to Avoid
These errors can disqualify your IRA or cause legal problems:
- Using generic LLC template not designed for IRA: Fails IRS structure requirements
- Listing yourself as owner/member: Creates prohibited transaction
- Omitting prohibited transaction language: No IRS compliance protection
- No succession planning: IRA frozen if you die or become incapacitated
- Allowing distributions to manager: IRS sees as personal benefit
- Missing disqualified persons restrictions: Opens door to violations
- Not signing as IRA custodian: Manager cannot sign as owner
- Inconsistent naming: LLC name must match across all documents
Critical Error
The most common mistake: listing yourself as "member" or "owner" instead of your IRA. The operating agreement must clearly state "[Your IRA Custodian] FBO [Your Name]" as the 100% member/owner. You are only the manager.
Where to Get an Operating Agreement Template
Sources for IRA LLC operating agreements:
- Checkbook IRA provider (best option): Included in setup fee, IRS-compliant
- Specialized attorney: $500-$2,000 for custom agreement
- Online legal services (LegalZoom, Rocket Lawyer): $100-$300, may need customization
- Generic templates: Avoid—usually not IRA-specific
- Your custodian: Some provide templates as part of service
- State-specific requirements: Ensure template matches your LLC state
Best Approach
Use the template provided by your checkbook IRA custodian (IRA Financial Group, Rocket Dollar, etc.). They are IRS-compliant and designed specifically for IRA LLC structure. If you have complex needs, have an attorney review and customize their template.
DIY Risk
While operating agreements are available online, using an IRA-specific template from a qualified provider is critical. Generic LLC templates do not include the specific language required for IRA compliance. One missing provision can disqualify your entire IRA in an audit.
Operating Agreement for Gold IRA LLC
If using checkbook control for precious metals investing, your operating agreement needs specific provisions:
- Authority to purchase precious metals from approved dealers
- Requirement that metals meet IRS fineness standards
- Designation of approved depository for storage
- Prohibition on personal possession of IRA-owned metals
- Augusta Precious Metals can coordinate with checkbook IRA providers for seamless setup
Frequently Asked Questions
1Do I need an attorney to create an IRA LLC operating agreement?
Not necessarily. Most checkbook IRA providers include a compliant operating agreement template as part of their setup fee. This is usually sufficient for standard situations. You may want an attorney review if you have complex investments, multiple managers, or special circumstances.
2Can I amend my operating agreement later?
Yes, you can amend the operating agreement as needed. However, you cannot change the fundamental structure (IRA as 100% owner, you as manager). Amendments might be needed for changing managers, succession planning, or adding specific investment authority.
3Does my operating agreement need to be notarized?
This varies by state. Most states do not require notarization of the operating agreement, but some banks or title companies may request it when opening accounts or closing on real estate. It doesn't hurt to have it notarized even if not required.
4What's the difference between articles of organization and operating agreement?
Articles of Organization are filed with the state to legally form the LLC (public document). The Operating Agreement is an internal document that governs how the LLC operates (not filed publicly). Both are necessary, but serve different purposes.
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