Looking to Set up a Self Directed Roth

Property Manager · Austin, TX · Member since 2024 · 96 posts · 71 votes

Howdy Everyone,

I am looking to open a self directed Roth IRA to start investing in businesses I am close to. I would like to get coffee or lunch with someone near me to discuss what my limitations are and how to properly fund and structure deals. I have a sloth of opportunities to potentially deploy capital and need some guidance on how to manage it accordingly.

[email protected]512-342-9566

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Matt Devincenzo

Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes

2mo

@Susanita VanGood I don't have checkbook control...I will say I wouldn't say anything about SDIRA etc. If you have checkbook control then you have an LLC set up, I think I would just give them whatever organizing docs they need and go from there. Often with things like this it isn't as much that you can't do it at the institution, and more that they're unfamiliar with the actual request and say it isn't an option.

For me, I've done real estate, notes, seller finance (sold IRA owned real estate and kept the note), private equity and a private stock offering. Honestly RE isn't as great as it sounds...I'm not saying not to own it in your IRA, but it has some operating challenges. It's physical, you interact with it. I haven't gone full cycle on the private equity or private stock, but both look to be great performers and I funded and walked away. The notes have been good as well, but my favorite notes were the ones that paid off early and gave me an equity bump.

An SDIRA is a great tool, and I'll definitely keep using it. But I more recently opened a brokerage IRA too and I switch cash to that periodically. It is by far easier to manage, gets rid of the dead equity position, and so far has performed specifically when my other options wouldn't have done as well. So I think using both is a great strategy if possible.

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Brett SynickyPro Member
Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes
5mo
@Thomas Talbert
You’re excluding some good opportunities to connect with people if you limit yourself to in person only? Are you against a Zoom call? You can drink coffee if you want. ;)
What would you like to invest in? Determine whether you want a checkbook IRA for easier and less costly investing.

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- Shango Collier
  Investor · Indianapolis, IN · Member since 2020 · 81 posts · 13 votes
  2mo
  @Brett Synicky hi Bret. I have a SDIRA with ETC and have now been advised to get a CPA to assist with correct filing of documents. Are you familiar with SDIRA with checkbook control? I'm open to a zoom call as well if you prefer to discuss this further.
  
  thank you :)
  1 Reply
Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
5mo
Do you already have an IRA, or other retirement funds that can be rolled into this new SD IRA? If not, then coming from someone who does have a SD IRA, has used it for nearly 20 years, and has been through the investing challenges...just go with a traditional brokerage setup for now.
The biggest issues with a SD IRA are the fees and dead 'equity'. So to really get the benefit of the SD component you need some decent cash to work with and get into good deals that beat the market. That's just not do-able with $7K, 21K or even $50K a lot of times. And the fees on these non standard transactions tend to be a drag if you do a private loan etc for a small balance.
So my suggestion would be invest in a brokerage acct, and put it into a good S&P 500 or similar investment. Let it grow as you fund each year and the investment continues to rise. And then when you have $100K then come back to the SD option.
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- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  3mo
  Quote from @Matt Devincenzo:
  
  The biggest issues with a SD IRA are the fees and dead 'equity'.
  I am in the process of setting up my SD traditional IRA up and it is more difficult than I expected. I am trying to find a bank or brokerage who allows LLC owned by SDIRA accounts to be opened that has a high-yield savings or mutual funds to park the cash with some return between deals. Do you have checkbook control? Which investments have you found to be best in your IRA? What is the best method to find investment opportunities? TY
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Julius VincentBusiness Member
Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 156 posts · 172 votes
5mo
@Thomas Talbert - I can't recommend @Brett Synicky enough. My clients are incredibly happy working with him.
[email protected]281-407-7353
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Jeff S.
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
5mo
Depending on whether these are passive or active business investments (i.e. will you take a salary?), you might consider opening an SD Roth 401k plan instead of the IRA, @Thomas Talbert. The difference in benefits and control is profound.

In addition to being able to contribute roughly 10 times the amount into a SD 401k plan compared to an SD IRA, there are tax advantages if your 401k plan borrows money. SD 401k plans don't require a custodian and allow you complete control of the funds as a trustee.

Note too that since both plan types are federally regulated, it doesn't matter what state you are in. You don't need anyone local since you will never visit your IRA custodian or personally meet with your 401K facilitator.

@Brett Synicky can certainly help you with this.
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Brett SynickyPro Member
Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 868 posts · 489 votes
2mo
@Shango Collier Happy to help however I can. Sent you a dm.
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Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
2mo
@Susanita VanGood I don't have checkbook control...I will say I wouldn't say anything about SDIRA etc. If you have checkbook control then you have an LLC set up, I think I would just give them whatever organizing docs they need and go from there. Often with things like this it isn't as much that you can't do it at the institution, and more that they're unfamiliar with the actual request and say it isn't an option.
For me, I've done real estate, notes, seller finance (sold IRA owned real estate and kept the note), private equity and a private stock offering. Honestly RE isn't as great as it sounds...I'm not saying not to own it in your IRA, but it has some operating challenges. It's physical, you interact with it. I haven't gone full cycle on the private equity or private stock, but both look to be great performers and I funded and walked away. The notes have been good as well, but my favorite notes were the ones that paid off early and gave me an equity bump.
An SDIRA is a great tool, and I'll definitely keep using it. But I more recently opened a brokerage IRA too and I switch cash to that periodically. It is by far easier to manage, gets rid of the dead equity position, and so far has performed specifically when my other options wouldn't have done as well. So I think using both is a great strategy if possible.
3 Reply
- Susanita VanGood
  Member since 2018 · 21 posts · 0 votes
  2mo
  Quote from @Matt Devincenzo:
  
  @Susanita VanGood I don't have checkbook control...I will say I wouldn't say anything about SDIRA etc. If you have checkbook control then you have an LLC set up, I think I would just give them whatever organizing docs they need and go from there. Often with things like this it isn't as much that you can't do it at the institution, and more that they're unfamiliar with the actual request and say it isn't an option.
  For me, I've done real estate, notes, seller finance (sold IRA owned real estate and kept the note), private equity and a private stock offering. Honestly RE isn't as great as it sounds...I'm not saying not to own it in your IRA, but it has some operating challenges. It's physical, you interact with it. I haven't gone full cycle on the private equity or private stock, but both look to be great performers and I funded and walked away. The notes have been good as well, but my favorite notes were the ones that paid off early and gave me an equity bump.
  An SDIRA is a great tool, and I'll definitely keep using it. But I more recently opened a brokerage IRA too and I switch cash to that periodically. It is by far easier to manage, gets rid of the dead equity position, and so far has performed specifically when my other options wouldn't have done as well. So I think using both is a great strategy if possible.
  Do you have any advice on where to find deals? I am planning to use mine with ST notes for now. I have read that RE can be better outside the IRA too because of prohibited transactions/restrictions plus there are tax advantages outside like depreciation and/or capital gains. I assume my custodian would charge me a termination fee for a transfer back to my ordinary traditional IRA custodian. If I find myself wanting to do that frequently, I might change custodians. I seriously considered only transferring part of the IRA as self-directed, but decided to go for it. TY for sharing your experiences.
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