Self-Directed IRA - who to trust?
Member since 2024 · 8 posts · 8 votes
Self-Directed IRA - who to trust?
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Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
1yMany here don’t realize that there are custodians and administrators for IRAs. By law, all IRA funds must be held by a custodian. Depending upon whether they are a bank or a trust company, custodians are heavily regulated by the IRS, DOL, possibly the FDIC, State Banking Commissioner, and maybe the Comptroller of the Currency. Administrators are not subject to any such scrutiny and are really just middlemen. Be super careful.
An administrator will pass your funds to a custodian in the background, provide statements, and hopefully help you stay within the law when you invest your IRA funds. Custodians do exactly the same thing but with the added regulatory and financial scrutiny noted above. Why would you place your money with an administrator?
It's not always obvious, but you can tell if you are dealing with a custodian rather than an administrator because they will usually have the word "Trust" in their name or they will be a bank or brokerage. Always ask, and don't be swayed by a sales pitch suggesting that the distinction doesn't matter—it absolutely does. If you think this distinction is unimportant, consider what happened to investors who placed their IRA funds with American Pension Services,—an administrator whose founder mishandled their money causing a $22 million loss.
It sounds like you want checkbook control, @Katie Accashian In this case, you need a special-purpose LLC. This means an LLC with an operating agreement specifying the IRS regulations regarding prohibited transactions, disqualified individuals, and others. It will allow you to invest the money on your own but under authority of the custodian. You would typically use a lawyer to set this up for you. Not LegalZoom.
Last, be careful of recommendations. Some here have self-interests. Other recommendations might not suit your situation. For example, fee structures among custodians are all over the map. Some charge based on account value, others per transaction, and some use a combination of both. If, for example, you are lending money, which involves few transactions, then select a custodian that charges by the transaction. If you are flipping houses, which is transaction-intensive, then choose a custodian that charges by the value of your account. What works for some might not be your best choice.
Best of luck to you, Katie.
16 Replies
- 1yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Quote from @Katie Accashian:
I am looking to take money from my retirement that I accumulated from my previous employer and move it into a self directed IRA to buy a real estate investment. This seems like a great fit for me other than the fact I cannot find a company that has modestly good reviews. I've looked into 6+ including calling and experiencing the customer service myself and have not found one that seems reliable. Any suggestions?
Sorry about your experience. These three smaller companies are popular with Bigger Pockets members, and their respective leaders are active on this forum. In no particular order:
@Bernard Reisz
ReSure Financial
@Dmitriy Fomichenko
Sense Financial@Brian Eastman
IRA123 - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Katie Accashian:
I am looking to take money from my retirement that I accumulated from my previous employer and move it into a self directed IRA to buy a real estate investment. This seems like a great fit for me other than the fact I cannot find a company that has modestly good reviews. I've looked into 6+ including calling and experiencing the customer service myself and have not found one that seems reliable. Any suggestions?
Are you looking for checkbook control or a company? Big difference on how you want to maange it and go through. The people listed below have been all over BP and can provide great information
7e investments53 Reviews - Member since 2024 · 8 posts · 8 votes1y
Thank you both, this is helpful. I’d like to do something where I can control it on my end.
- Investor · Member since 2025 · 21 posts · 21 votes1y
Quote from @Katie Accashian:
I am looking to take money from my retirement that I accumulated from my previous employer and move it into a self directed IRA to buy a real estate investment. This seems like a great fit for me other than the fact I cannot find a company that has modestly good reviews. I've looked into 6+ including calling and experiencing the customer service myself and have not found one that seems reliable. Any suggestions?
@Katie Accashian it sounds like you're doing your due diligence, which is great. I'm curious what your primary concerns were with reliability when calling the 6 providers. Also, what would you consider the most important factor when choosing a company?
Checkbook control can be a good self-directed IRA setup that can give you flexibility to invest in real estate on your terms. Some of the benefits are transaction speed, limited liability protection. - 1yMichael CalveyPro MemberHead of Sales at BiggerPockets · Denver, CO · Member since 2023 · 124 posts · 154 votes
I know it can be challenging to find a trusted company. I would recommend Equity Trust, our exclusive partner for self-directed IRAs. They have a lot of experience, over 50 years of it, lol, so I would say they’re a proven choice for turning retirement funds into real estate investments.Simply mention you’re a BiggerPockets member, and they’ll provide a tailored experience. If you're interested, I can set up a personal introduction. Check them out at BiggerPockets.com/equitytrust
Are they any specific features that are most important to you in a self-directed IRA provider?
- Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes1y
Many here don’t realize that there are custodians and administrators for IRAs. By law, all IRA funds must be held by a custodian. Depending upon whether they are a bank or a trust company, custodians are heavily regulated by the IRS, DOL, possibly the FDIC, State Banking Commissioner, and maybe the Comptroller of the Currency. Administrators are not subject to any such scrutiny and are really just middlemen. Be super careful.
An administrator will pass your funds to a custodian in the background, provide statements, and hopefully help you stay within the law when you invest your IRA funds. Custodians do exactly the same thing but with the added regulatory and financial scrutiny noted above. Why would you place your money with an administrator?
It's not always obvious, but you can tell if you are dealing with a custodian rather than an administrator because they will usually have the word "Trust" in their name or they will be a bank or brokerage. Always ask, and don't be swayed by a sales pitch suggesting that the distinction doesn't matter—it absolutely does. If you think this distinction is unimportant, consider what happened to investors who placed their IRA funds with American Pension Services,—an administrator whose founder mishandled their money causing a $22 million loss.
It sounds like you want checkbook control, @Katie Accashian In this case, you need a special-purpose LLC. This means an LLC with an operating agreement specifying the IRS regulations regarding prohibited transactions, disqualified individuals, and others. It will allow you to invest the money on your own but under authority of the custodian. You would typically use a lawyer to set this up for you. Not LegalZoom.
Last, be careful of recommendations. Some here have self-interests. Other recommendations might not suit your situation. For example, fee structures among custodians are all over the map. Some charge based on account value, others per transaction, and some use a combination of both. If, for example, you are lending money, which involves few transactions, then select a custodian that charges by the transaction. If you are flipping houses, which is transaction-intensive, then choose a custodian that charges by the value of your account. What works for some might not be your best choice.
Best of luck to you, Katie.
- Developer · Moscow Idaho · Member since 2024 · 224 posts · 143 votes1y
I have used Equity Trust and have had friends use it. It was easy. No problems.
- 1yBonnie LowPro MemberLender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
Following because I'm looking for the same thing. Recently, I was pointed to Equity Trust or Directed IRA by a fellow investor. Equity Trust is who her mastermind group recommends. I can't vouch for either at this point but will be looking into them. One thing to consider is fee structure, which apparently varies widely in this segment. I was told Equity Trust has a very reasonable fee structure, FWIW.
- Member since 2019 · 1 post · 0 votes1y
IRAFinancial is worth a look. They are a custodian, charge a flat with no fees, and provide free audit protection. I am leaning towards working with them over Equity Trust.
- Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes1y
@Kaaren Hall with U Direct is also another great choice.
She's been on the Tax Panel at BPCon with me for the past few years. She also just wrote a book for BP as well
https://store.biggerpockets.com/products/self-directed-ira-i... - 1yMichael CalveyPro MemberHead of Sales at BiggerPockets · Denver, CO · Member since 2023 · 124 posts · 154 votes
Quote from @Bonnie Low:
Following because I'm looking for the same thing. Recently, I was pointed to Equity Trust or Directed IRA by a fellow investor. Equity Trust is who her mastermind group recommends. I can't vouch for either at this point but will be looking into them. One thing to consider is fee structure, which apparently varies widely in this segment. I was told Equity Trust has a very reasonable fee structure, FWIW.
@Bonnie Low The team at Equity Trust is great. It's why we partnered with them to ensure our BiggerPockets audience has access to the top companies in the space. Make sure to mention you are a BiggerPockets member as you special discounts on establishing Checkbook Control with the IRA LLC, along with personalized support.
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
i know this wasn't your question but i have to ask... what's your strategy? and are you an experienced investor?
- 1yBonnie LowPro MemberLender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
Quote from @Michael Calvey:
Quote from @Bonnie Low:
Following because I'm looking for the same thing. Recently, I was pointed to Equity Trust or Directed IRA by a fellow investor. Equity Trust is who her mastermind group recommends. I can't vouch for either at this point but will be looking into them. One thing to consider is fee structure, which apparently varies widely in this segment. I was told Equity Trust has a very reasonable fee structure, FWIW.
@Bonnie Low The team at Equity Trust is great. It's why we partnered with them to ensure our BiggerPockets audience has access to the top companies in the space. Make sure to mention you are a BiggerPockets member as you special discounts on establishing Checkbook Control with the IRA LLC, along with personalized support.
That's great - thank you for this advice! I'm attending one of their webinars next week to find out more.
- Member since 2025 · 1 post · 0 votes1y
Hello. I realize this is a real estate focused group, and I have some basic questions. But I need some help. I'm an early retired person in the US (61 yo). I don't want to start a political discussion, but with current events I'd be interested in moving my somewhat significant traditional IRA assets offshore before that becomes impossible.
An SDIRA seems like one way to do that. I don't need to invest in foreign real estate etc, and I'm not looking for tax avoidance. What I want is a way to have and trade the stocks and bonds I currently own at a large brokerage in an IRA (as well as ETFs preferably), but held (without paying extra foreign tax) offshore.
I’ve quickly begun to realize that the SDIRA waters are pretty shark-infested. One really needs to be careful about choosing custodians etc.
Is there any advice on getting started with this? Thank you.
- Member since 2024 · 4 posts · 0 votes1y
I assume you are still a W-2 employee. If so, and you can find time to start a side hustle that can generate some income (even if $100), you can rollover your pre-tax IRAs/401k into a self directed 401k. No cutsodians required. Note that Roth IRAs cannot be rolled over but any pre-tax IRA or 401k can be rolled over. After it is set up, you open a bank account in your 401k's EIN, roll over the funds, and have checkbook control. Contributiuons won't be much based on side hustle, but the rollover part gives you access to your funds.
Check out mysolo401k.net. They are outstanding and the website has so much info it can get overwhelming. The best part is that the Harvard lawyers that own it actually answer questions. They have some sort of IRA LLC option, but I don't have info on it. Good luck.
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