Self Directed Roth IRA

15 Replies

Hi Everyone,  

Good day! I am a newbie here and I was wondering if anyone knows a good institution for the self directed IRA account that would allow REI later on. I heard that some institutions allow it and some don't. I am based at Houston, TX and I am looking for somewhere to open an Roth IRA account today. Thank you so much for your response and wish you a wonderful day.

David

@David Y.

Walk into the bank you normally bank with and open a Roth IRA today. That is the only way you are going to get this done.

In the future, you can easily transfer that Roth IRA to a self directed plan once you have accumulated enough capital to begin investing in real estate or other non-traditional assets.

Quest IRA is based in Houston and can do that. They advertise a lot locally. I have never used them or know anyone who has. I'm just stating an option for you to look into.

I also want to add that if you don't have any money in a Roth IRA account you should open it with a bank or trading company of your choice. Self Directed IRA accounts have a lot of fee's and a typically only used right before money is needed for investment and transferred back into a traditional Roth IRA after the investment and gains are returned. Transferring money back and forth in different traditional and self directed Roth IRA accounts is very common.

I am in agreement with Brian - if you need to open an IRA by today and make a contribution for tax purposes, go to the local bank and open one. You can then open your Self-Directed IRA at your leisure, and transfer funds from the bank IRA, as well as roll over any funds you may have in other IRAs or old 401(k)s from former employers.

Most, if not all Self-Directed IRA custodians allow Real Estate investment, either by direct purchase by your IRA, or purchase via an IRA-owned entity like a single member LLC, LP or corporation. Requirements vary from custodian to custodian.

There are many different companies to choose from when deciding which IRA provider will help you invest your retirement funds into real estate. What often gets overlooked is the type of company you are choosing. IRA providers can be put into three separate categories: Custodians, Administrators, and Facilitators.

Custodians are the first type of company, and are usually the most common. They're either a bank, credit union, or non-bank custodian approved by the IRS (usually a broker dealer who obtains IRA approval). Custodians are permitted to custody assets held in an IRA under IRC Section 408. They're also subject to strict regulatory oversight at a State or Federal level. Custodians tend to take a more conservative approach when reviewing alternative assets for investment, as they want to avoid the custody of any assets that may be involved in prohibited transactions. Alternative Asset custodians cannot give any tax, legal or investment advice, cannot assist with the structure of an investment, and cannot endorse, promote or align with specific investment sponsors.

Administrators are the next type of company. Essentially anyone can be an administrator, and their main function is to perform administrative functions only. Because of this, they also need to have an identified custodian for the self-directed IRA named in the account disclosure documents. Administrators are only subject to regulation if required due to profession (CPA or attorney), not for role as administrator. This allows administrators to be much more liberal in accepting assets and allows the ability to align with investment sponsors. Review fee schedules carefully – there may be separate charges for whatever 3rd party custodian they are using.

The third company type is a Facilitator. They educate investors on the process of self-directed investing or assist in setting up single-member LLCs for either “check-book control” or to purchase a franchise or ROBS (Roll-Over Business Startup). They may also provide administrative services for the LLC. Like Administrators, Facilitators must have an identified custodian for the self-directed IRA and are only subject to oversight on a professional level. They are also much more liberal in accepting assets and can align with investment sponsors. Again, review fee schedules carefully – there may be separate charges for whatever 3rd party custodian and/or administrator they are using.

So when you're looking for someone who offers a self-directed IRA, make sure you know the type of company you're dealing with. This will help when determining which company best fits your investment scenario. It is advisable to do your due diligence and ask about such things as how long have they been in business, are alternative assets their sole focus, are they BBB accredited and rated, are they a regulated financial institution, have they ever been sanctioned by any regulatory bodies, how many accounts and how much in assets do they administer?

@David Y.

Welcome to BP!  If you're looking to contribute to a new account for 2014 tax year today, you can still setup an SDIRA and make contributions via e-check to beat the deadline. Brian's method works just as well. I've had to do that personally once or twice. =)

Some custodians that offer self-directed Roth IRAs include:

Pensco Trust

Equity Trust

Sunwest Trust

IRA Services Trust Company

I have a little a familiarity with Equity Trust flat annual fee very reasonable.  I did not use them as I ended up with Solo 401K.

Unless you are worried of topping the contribution limit for one year, the deadline of today does not matter since there is no deduction for a Roth IRA.

Originally posted by @Brian Eastman :

@David Y.

Walk into the bank you normally bank with and open a Roth IRA today. That is the only way you are going to get this done.

In the future, you can easily transfer that Roth IRA to a self directed plan once you have accumulated enough capital to begin investing in real estate or other non-traditional assets.

 Thank you so much Brian!

Originally posted by @Mark Parzych :

I also want to add that if you don't have any money in a Roth IRA account you should open it with a bank or trading company of your choice. Self Directed IRA accounts have a lot of fee's and a typically only used right before money is needed for investment and transferred back into a traditional Roth IRA after the investment and gains are returned. Transferring money back and forth in different traditional and self directed Roth IRA accounts is very common.

Thank you so much Mark! 

Originally posted by @Doreen Chaisson :

I am in agreement with Brian - if you need to open an IRA by today and make a contribution for tax purposes, go to the local bank and open one. You can then open your Self-Directed IRA at your leisure, and transfer funds from the bank IRA, as well as roll over any funds you may have in other IRAs or old 401(k)s from former employers.

Most, if not all Self-Directed IRA custodians allow Real Estate investment, either by direct purchase by your IRA, or purchase via an IRA-owned entity like a single member LLC, LP or corporation. Requirements vary from custodian to custodian.

There are many different companies to choose from when deciding which IRA provider will help you invest your retirement funds into real estate. What often gets overlooked is the type of company you are choosing. IRA providers can be put into three separate categories: Custodians, Administrators, and Facilitators.

Custodians are the first type of company, and are usually the most common. They're either a bank, credit union, or non-bank custodian approved by the IRS (usually a broker dealer who obtains IRA approval). Custodians are permitted to custody assets held in an IRA under IRC Section 408. They're also subject to strict regulatory oversight at a State or Federal level. Custodians tend to take a more conservative approach when reviewing alternative assets for investment, as they want to avoid the custody of any assets that may be involved in prohibited transactions. Alternative Asset custodians cannot give any tax, legal or investment advice, cannot assist with the structure of an investment, and cannot endorse, promote or align with specific investment sponsors.

Administrators are the next type of company. Essentially anyone can be an administrator, and their main function is to perform administrative functions only. Because of this, they also need to have an identified custodian for the self-directed IRA named in the account disclosure documents. Administrators are only subject to regulation if required due to profession (CPA or attorney), not for role as administrator. This allows administrators to be much more liberal in accepting assets and allows the ability to align with investment sponsors. Review fee schedules carefully – there may be separate charges for whatever 3rd party custodian they are using.

The third company type is a Facilitator. They educate investors on the process of self-directed investing or assist in setting up single-member LLCs for either “check-book control” or to purchase a franchise or ROBS (Roll-Over Business Startup). They may also provide administrative services for the LLC. Like Administrators, Facilitators must have an identified custodian for the self-directed IRA and are only subject to oversight on a professional level. They are also much more liberal in accepting assets and can align with investment sponsors. Again, review fee schedules carefully – there may be separate charges for whatever 3rd party custodian and/or administrator they are using.

So when you're looking for someone who offers a self-directed IRA, make sure you know the type of company you're dealing with. This will help when determining which company best fits your investment scenario. It is advisable to do your due diligence and ask about such things as how long have they been in business, are alternative assets their sole focus, are they BBB accredited and rated, are they a regulated financial institution, have they ever been sanctioned by any regulatory bodies, how many accounts and how much in assets do they administer?

Thank you so much Doreen for the thorough explanation!!

Originally posted by @Loren Whitney:

@David Y.

Welcome to BP!  If you're looking to contribute to a new account for 2014 tax year today, you can still setup an SDIRA and make contributions via e-check to beat the deadline. Brian's method works just as well. I've had to do that personally once or twice. =)

 Thank you so much Loren!

Originally posted by @Mark Nolan :

Some custodians that offer self-directed Roth IRAs include:

Pensco Trust

Equity Trust

Sunwest Trust

IRA Services Trust Company

 Thank you so much Mark!

Originally posted by @Richard Dunlop :

I have a little a familiarity with Equity Trust flat annual fee very reasonable.  I did not use them as I ended up with Solo 401K.

Unless you are worried of topping the contribution limit for one year, the deadline of today does not matter since there is no deduction for a Roth IRA.

 Thank you so much Richard!

This post has been removed.

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