Question Nevis LLC as an asset in my SDIRA

[danneskjold]

For a few months I've been working with a registered agent in Nevis to form a single-member LLC. After what seemed like an endless process of notarizing and providing documents, they were able to officially form the entity. The problem is, they refused to set up my SDIRA account as the owner. This is necessary for my SDIRA to fund the LLC as an asset.

I tried to explain to them, ad nauseam, that the owner can not be myself or the SDIRA custodian, but they are afraid of losing their license for forming a company in this way.

I used this site as a template:

Here’s how to take your IRA offshore in 6 steps - Premier Offshore Company Services

In this article I’ll list the steps necessary to take your US retirement account offshore. Whether you’re looking for asset protection, privacy, or investment diversification, here’s how to take your IRA offshore in 6 steps. Step 1: Determine if your IRA is eligible to go offshore Before you can...

premieroffshore.com

Step 3 contains the verbiage I need them to use. Isn't this sort of thing done frequently, or am I nuts?

Has anyone here successfully gotten a Nevis formation group to create the LLC using this verbiage for the owner? It seems crazy that this technicality is holding up the entire process.
Furthermore, since I am the manager, could I possibly change the owner myself retroactively without the formation group? It seems this would release them from any regulatory penalties.

Thanks for your time.

 

[uplana]

The link you posted refer to Panama banks which I believe is not secure compared to many other countries.

Will be following this thread anyway to see if some of the experts @Sols or @Martin Everson will chime in to reply.

 

[Martin Everson]

Not touching anything US with a barge pole...sorry......but best of luck

 

[danneskjold]

The link you posted refer to Panama banks which I believe is not secure compared to many other countries.

Will be following this thread anyway to see if some of the experts @Sols or @Martin Everson will chime in to reply.

It makes mention of Nevis, albeit only once. Going into the process, all custodians I worked with (on my third now) said I would need this verbiage regardless of where the company was formed if I wanted to hold the LLC as an asset for funding. This is the asset protection rung of my strategy since I am a US citizen.

In any case I got in touch with another registered agent in Nevis, who were familiar with this specific setup and could take over the paperwork that the other firm had started.
However, I recently opened a solo 401k instead, which can also hold the LLC as an asset. The difference - compared to a simple self-directed IRA custodian - is that I become the trustee (or my own custodian), and the verbiage changes. This new verbiage allowed my original registered agent to establish the LLC while keeping the asset protection aspect intact. There are other nuances of the solo 401k that I can recite if anyone cares, but it primarily has to do with how your assets are reported to the IRS (or not reported, in this case).

 

[Patrick846]

You need to have the LLC owned by the IRA from the beginning as having you the owner first and transferring to the IRA would be a prohibited transaction and would put your whole IRA at risk of disqualification by the IRS.
In the same token, you would need all the fee to create this LLC to be paid from IRA fund, not your own as it will also be a prohibited contribution.

 

[Cap Rish]

It makes mention of Nevis, albeit only once. Going into the process, all custodians I worked with (on my third now) said I would need this verbiage regardless of where the company was formed if I wanted to hold the LLC as an asset for funding. This is the asset protection rung of my strategy since I am a US citizen.

In any case I got in touch with another registered agent in Nevis, who were familiar with this specific setup and could take over the paperwork that the other firm had started.
However, I recently opened a solo 401k instead, which can also hold the LLC as an asset. The difference - compared to a simple self-directed IRA custodian - is that I become the trustee (or my own custodian), and the verbiage changes. This new verbiage allowed my original registered agent to establish the LLC while keeping the asset protection aspect intact. There are other nuances of the solo 401k that I can recite if anyone cares, but it primarily has to do with how your assets are reported to the IRS (or not reported, in this case).

Could you please share which agency have you used ?
anyone else would like to recommend an agency for Nevis incorporation ?
Which would be better in terms of offshore banking NEVIS or COOK ISLANDS ?
Also in terms of registration costs and annual fees ?

thanks in advance

 

[Vor]

have you looked into the compliance on the Nevis LLC on the US tax side of things? It's pretty expensive to maintain compliant offshore companies as a US citizen, I know because I do it and I have fairly large legal fees to do so. Large is relative I guess but proper offshore company reporting on top of all the FBAR crap will be thousands.

You may not want to pursue setting up a Nevis LLC as a US citizen just a fair warning, none of the offshore service provider sites will tell you the cost of compliance on the tax/fincen side of things they just wanna sell you so of course an American can setup an offshore company but should you? Probably not.

 

[Davis123]

have you looked into the compliance on the Nevis LLC on the US tax side of things? It's pretty expensive to maintain compliant offshore companies as a US citizen, I know because I do it and I have fairly large legal fees to do so. Large is relative I guess but proper offshore company reporting on top of all the FBAR crap will be thousands.

You may not want to pursue setting up a Nevis LLC as a US citizen just a fair warning, none of the offshore service provider sites will tell you the cost of compliance on the tax/fincen side of things they just wanna sell you so of course an American can setup an offshore company but should you? Probably not.

Don't you declare it as a single owned entity like US LLCs ? I was doing it years ago. Don't use Nevis anymore,

 

[Vor]

Don't you declare it as a single owned entity like US LLCs ? I was doing it years ago. Don't use Nevis anymore,

disregarded is the word your looking for. Things changed in 2017 with the tax reform reporting is worse for any offshore company now. If it's an actual corporate vehicle for tax purposes.

 

[Patrick846]

If your offshore LLC is disregarded and owned by you or one of your US tax reporting entity, the reporting is not that difficult. You will have to file a 8858, a 8938 and an FBAR. These forms are not difficult to fill out.

 

[Vor]

If your offshore LLC is disregarded and owned by you or one of your US tax reporting entity, the reporting is not that difficult. You will have to file a 8858, a 8938 and an FBAR. These forms are not difficult to fill out.

if it's not an actual corporate vehicle for tax purposes though what's the point in even setting up the Nevis LLC if it's tax disregarded?

 

[Patrick846]

if it's not an actual corporate vehicle for tax purposes though what's the point in even setting up the Nevis LLC if it's tax disregarded?

Excellent asset protection against creditor/lawsuit.

 

[danneskjold]

You need to have the LLC owned by the IRA from the beginning as having you the owner first and transferring to the IRA would be a prohibited transaction and would put your whole IRA at risk of disqualification by the IRS.
In the same token, you would need all the fee to create this LLC to be paid from IRA fund, not your own as it will also be a prohibited contribution.

Well that's not good. I think I wired the formation fees from either a personal bank account or business bank account...a business which I own.

 

[danneskjold]

Could you please share which agency have you used ?
anyone else would like to recommend an agency for Nevis incorporation ?
Which would be better in terms of offshore banking NEVIS or COOK ISLANDS ?
Also in terms of registration costs and annual fees ?

thanks in advance

Sorry for the delay...I used Joseph Rowe Law to form, but would've gone with Acme Trust if I could do it all over again.
The latter's fees are less.

 

[danneskjold]

have you looked into the compliance on the Nevis LLC on the US tax side of things? It's pretty expensive to maintain compliant offshore companies as a US citizen, I know because I do it and I have fairly large legal fees to do so. Large is relative I guess but proper offshore company reporting on top of all the FBAR crap will be thousands.

You may not want to pursue setting up a Nevis LLC as a US citizen just a fair warning, none of the offshore service provider sites will tell you the cost of compliance on the tax/fincen side of things they just wanna sell you so of course an American can setup an offshore company but should you? Probably not.

I despise my government just enough to pay the fees. We'll see what they add up to come renewal time.