Savvy investors have utilized the LLC process since the 1990’s to have more control and self-direction with their retirement funds. To date, this process has been legally tested and is an IRS-Approved process. Below are links to cases in which the LLC model was upheld and confirmed legal:
Swanson vs.

IRA holder James Swanson created a special-purposebusiness owned by his IRA. He made himself a non-compensated manager, allowing complete control of the investments. The IRS challenged Swanson, on the grounds that this was a prohibited transaction. The judged found Swanson compliant and since then, LLC IRAs have been legal. See the case here:106 TC 76

IRS Field Services Advice Memorandum 20018011

In 2001, the IRS educated its agents on the legality of LLC IRAs via FSA 200128011. This memo reiterated the findings and rulings of the 1996 Swanson case, enabling individuals to user self-directed IRAs to purchase shares of a newly-formed LLC without self-dealing. See the case here: FSA 200128011

TC Memo

In 2013 another individual, Terry Ellis, used the LLC model to purchase a used car business with his retirement funds. The IRS originally argued that this violated Section 4975 of the tax code, but the court decided and confirmed that this action was compliant. As a result, LLC IRAs are recognized by both the Tax Court and IRA as completely legal, with precedence. See the case here: TC Memo 2013-245