Real Estate Agent · naperville, IL · Member since 2014 · 193 posts · 53 votes
Hi,
I know this topic has been discussed several times but I was having hard time to come the conclusion about the right SDIRA Custodian selection. I am in process of rolling over my and my wife's 401K with our previous employers and establish a LLC owned by both the IRAs. Here is the list I put together which can be a good starting point.
1. Entrust
2. Equity Trust
3. Pensco
4. Sterling
5. UDirect
6. Asset Exchange Strategies
7. American Pension Services
8. Guidant
9. Next Generation Trust Services
10. Sense Financial.com
11. IRA Services Trust Company
I would appreciate recommendations and reviews from BP members to help me select the right Checkbook Controlled Self-Directed IRA company. Would be helpful (to me and many others) if you guys can give some ratings (let's say 5 for the best/strong recommendation and 1 for worst/must avoid.
I would strongly sugest you set up a Solo 401k not a sdira. You don't need a custodian and you can act as the trustee. Solo 401k is far superior for real estate investors. Won't trigger urbi tax like the sdira if you use a loan. Mysolo401k.net has a lot of info on subject
Most of the companies you list do not offer checkbook control IRA LLC or Solo 401k plans. They are custodians and simply hold and report on accounts. Such an account may be used to invest directly into real property for example - in which case the custodian would be the processor - or into a special purpose LLC that would provide you with checkbook control.
The only firms you list that currently offer checkbook control include:
Sense Financial
Asset Exchange Strategies
There are many other firms offering such services that you would want to look into.
The key in this field is not entirely the initial setup, but the quality of education and ongoing advisement you will receive from the provider. There are "document providers" and "advisory firms", if you understand the difference.
So you meant to say Custodians i.e. who holds the money and the Service Provider i.e. who offer different options- IRA-LLC are TWO DIFFERENT entities? Does it mean that I will need two work with two separate companies?? very confusing.....
The IRA LLC is a two vendor solution. There is an IRA held by a custodian. They serve as the IRA administrator, are the gatekeeper for IRA events like contributions, distributions and plan-to-plan transfers, and do annual reporting. That IRA will make a single investment, into the ownership of a special-purpose LLC that will be wholly owned by the IRA and managed by you. All investment transactions are handled through the LLC and do not involve the custodian. Custodians by rule are prohibited from providing tax, legal, or investment advice. The LLC entity and any meaningful support to you as an investor will come from a 2nd vendor, which is the IRA LLC facilitator.
Generally speaking, you would establish a relationship with a facilitator/advisory firm. They will have a relationship with one or more suitable custodians, but will serve as your primary interface for the establishment of the plan and ongoing support. The Custodian is pretty much a back-end administrative component.
I have been referred to Asset Exchange Strategies to assist with a SDIRA in purchasing rental property out of my 401k. Has anyone had experience or reviews as requested by Ku ar above of the best company to work with?
I would strongly sugest you set up a Solo 401k not a sdira. You don't need a custodian and you can act as the trustee. Solo 401k is far superior for real estate investors. Won't trigger urbi tax like the sdira if you use a loan. Mysolo401k.net has a lot of info on subject
Now considering something like this in hopes it will give me both the flexibility and support to engage with companies to help me manage stocks, real estate and metals.
So you know, the personal income blog you found is just trash created by a gold dealer to promote their own brand and make it look like they are well rated.
A self-directed IRA LLC is a great program for real estate investing and a fully diversified portfolio. The key is working with a quality firm that provides meaningful support beyond just the initial setup of the plan.
Custodians do not actually provide IRA LLC programs. A custodian is used to hold the IRA, but an IRA facilitator or legal firm creates the LLC and (potentially) provides ongoing guidance as you use this powerful and flexible tool.
The IRA owns the LLC and the custodian simply documents that; much like a brokerage documenting an IRA's ownership of a stock or fund.
@Brian Eastman: Please update your knowledge of information, as Pensco, Equity, Sterling (now part of Equity) and IRA Services also do permit IRA LLC, exactly in the manner that you have described in the two step process, just that they have additional documentation to be provided as compared to some of the others in the list.
Additionally, an IRA account can only be opened by a custodian (who is an approved bank, trust company or equivalent). They are the most important component. Custodians are generally passive, and should not be providing any form of advice.
With regards to the investments whether it is an IRA LLC or otherwise, the individuals should work with knowledgeable qualified professionals to provide them with what they require, whether they be advisors, legal counsel, facilitators, CPA's or others.
In my post, I state that custodians do not actually provide the LLC. They will refer you elsewhere to have that work done. Permitting and providing are two entirely different concepts.
As you state, the custodian is passive and simply documenting the fact that the IRA has invested into the LLC entity.
The custodian will also issue a 5498 on a yearly basis to report the entire value of the IRA to the IRS; therefore, an annual valuation must be provided for the LLC on an annual basis so that the custodian can report the correct value.