Choosing a self directed IRA company.

21 Replies

Why choose one self-directed IRA company over another? Is there any kind of benefit other than personal/professional relationship? Do/can these companies offer incentive in order to invest with them? Lower fees, etc....

@Drew Poniewaz

The first step is to identify the type of self-directed retirement plan that will best suit your investment goals.

Self-Directed IRA custodians, of which there are about 3-4 dozen with varying degrees of customer service, responsiveness and fees hold accounts and document investment transactions. They are essentially doing what a brokerage house does for an IRA, just with people processing individual transactions as opposed to computerized trading of commoditized assets. Every transaction requires instructions from you (forms and supporting documents), and a few days for processing and issuance of funds. Fees are typically based on account value, number of assets and per/transaction or some combination of the above. This model works best for more singular, static investments such as specialty funds, private equity and the like.

IRA Advisor/Facilitator firms typically offer Checkbook IRA and Solo 401(k) plans that put you more directly in control of investments. A legal entity such as a LLC is formed under the umbrella of an IRA and you can act as the manager. For investments that require multiple transactions over time, or that may be time-sensitive in nature, this is often a better approach. IRA Custodians typically do not offer such services, though they may refer you to an attorney for help. The specialty firms that offer such plans will generally have a turn-key solution including the setup of an IRA with a custodian, the legal work, and ongoing advisory support. As with the custodian firms, there is a pretty big array of quality of service and pricing.

So, read up here on BP, get on the phone with some providers of both types of services and speak with other investors who use such programs.  It will probably become clear to you pretty quickly which model will work best, and a few firms will stand out as providing value through a combination of quality service and reasonable fees.

@Drew Poniewaz

Depending on your investments, I think the following 3 things are more important that saving $10 or 15 a year on lower fees. Most  self-directed IRA custodians fall in a similar price range. Below are 3 things to consider in addition to fees when selecting a custodian/administrator for a self-directed IRA.

1. Knowledge (They actually know what they are talking about)

2. Customer service (can you reach a person, how quickly?)

3. Ease of transactions

@Brian Eastman @Carl Fischer

Thank both of you gentlemen for replying. I have some money with Advanta IRA that I have used with a JV partner to invest in non performing notes. So far no complaints and I would assume my situation is more like a custodian. I listen to a particular podcast on the subject and they mention another SDIRA company and so it just got me thinking. I will in the near future have some money from my wife's IRA that I will be changing over into self directed.

@Drew Poniewaz

How quickly you can reach someone and and how quickly they respond to your transaction requests are pretty high priority for a lot of self-directed investors with custodial accounts. If you have checkbook control, those factors become less important, especially with regard to transaction speed.

On the IRA side, that checkbook control requires an LLC. If you are eligible for a Solo 401k, you can have that checkbook control without a custodian or an LLC as well as other benefits.

@Justin Windham

I own a small business that we don't offer 401k for our employees so I can't so a solo 401k. I looked into that option.

@Drew Poniewaz

I would look for service, fair pricing, support, how long they have been in business and if they have had any issues with regulators. That being said, I would look at IRA Services Trust Company as they have been in business since 1978 and have not had any issues with regulators.

Originally posted by @George Blower :

@Drew Poniewaz

if they have had any issues with regulators. 

Who regulates the self-directed IRA industry?

I am looking to open a Coverdall ESA which is similar to a SDIRA for educational purposes. Do typical SDIRA companies also offer Coverdall ESA accounts? I eventually do plan to open a Self Directed 401K as well so ideally I would choose a company that offered both.

Are there any nuances with the Coverdall that I should be aware of?

P.S. Anyone have experience with Mark Kholer and Mat Sorenson?  They offer numerous accounting, tax, legal, estate planning etc. advice through their different companies and educational platforms. I've watched some of Mark's seminars online and he is very informative and has great insight.

https://markjkohler.com

https://sdirahandbook.com/

@Jim Hiler

New Direction IRA offers Coverdell ESAs.

@Jim Hiler

Not all self-directed custodians will offer a Coverdell ESA. The main thing to note about an ESA is the contribution limits are different than those of Traditional and Roth IRA limits.

In terms of custodians, here are some things to consider. 

1. Fees, this is important but I would not say it is the most important thing to consider

2. Speed, you want a custodian that has a quick processing time period

3. Reachable, do you really want to have an automated phone promt system that takes 30 minutes to get to a real person, or do you want to have the phone answered by a real person

4. Customer Service, you want a custodian that will listen to your needs and be able to help assist you with kindness

5. Knowledge, you want a custodian that knows what they are doing and can help explain the rules and prohibited transactions to you

@Jim 

@Jim Hiler we (2 partners and I) used one of the lawyers in Mark's office to set up our 3 way LLC where each member was a SDIRA. Great service and fair pricing I felt. We had already set up each of our SDIRAs with @Dmitriy Fomichenko firm which we also had great service from. My personal recommendation would be to call up a few of the providers here link him, @Brian Eastman , @Carl Fischer or @Justin Windham and see which one is the best fit for you. My feel after talking to a few of them was that ALL of them would give more personal service that some of the 'big firms' out there.

Dan Dietz

@Daniel Dietz Thanks for the mention!

@Jim Hiler I'm a fan of KKOS Lawyers, in which Mark and Mat are partners. They're good guys and very knowledgable. 

Updated 4 months ago

*knowledgeable

@Jim Hiler

Your welcome.  I will be fishing Delray area next month-great place to live and work and fish. 

I chose my company based on the recommendation of a friend. My choice was confirmed when I had issues trying to roll over my existing account into my new account, and my custodian stepped in and handled everything. 

When speaking with my banker, he shared that he works with many custodians, and no one is as nice, knowledgeable or has better service than the company I chose.

@Carl Fischer Delray is great. We moved down from NY about 6 years ago to get out of all NYC rat race and the cold. My struggle now is finding deals because of how popular the area has become!


At some point I would like to discuss my plan to open a Coverdall ESA and check book IRA. I assume I may be too late to open a coverdall ESA prior to the 2017 deadline of April 2017.

@Jim Hiler

Even the growth in Delray doesn’t compare with NYC prices. But yes the prices are definitely on the rise again. 

Yep you only have a 6 days to get an ESA opened and funded for 2017. 

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