What is a checkbook LLC?
The structure: your self-directed IRA forms and owns an LLC, you serve as the LLC's manager, and the LLC opens a bank account. Because you sign on that account, you can write checks with IRA money, hence 'checkbook control.'
The entity itself is not illegal. The problem is what promoters build on it: the claim that the LLC can buy metal and hand it to you for home storage without triggering a distribution.
Why is the checkbook LLC pitch dangerous?
The tax code prohibits IRA 'self-dealing' and requires IRA assets to be held by a qualified custodian. Metal in your home safe is in your personal possession, whatever the LLC's paperwork says, and the IRS has treated exactly that arrangement as a distribution.
The consequence is not a small fine: the entire account can be deemed distributed, taxed as ordinary income, plus penalties if you're under the applicable age. The people selling the structure don't bear that risk. You do.
How does the checkbook LLC show up in practice?
It arrives dressed as sophistication: 'what the wealthy do,' 'off the radar,' 'your metal, your hands.' If you want metal in your hands, buy it personally. If it's IRA metal, it belongs in a depository, that is the whole rule.