Recommendation for Self-Directed IRA administrator / custodian?

Question

I'm helping my Dad set up a self-directed IRA so he can do some real estate investing. He will want an administrator/custodian that is 1) Reputable

2) Responsive & helpful regarding organizational structure and allowable transactions.

3) Reasonable fees

I have searched the internet, and it looks like the Gold investment shops have spent more money on SEO than the real estate folks. (The "Top 10 Lists" look like shills for gold firms.)

Michael Plaks · Answer

@Jefferson Smith -

both people who responded, @Brian Eastman and @Carl Fischer provide the services you're looking for and have solid reputation. Add @Dmitriy Fomichenko, and you have my top 3.

Caroline C. · Answer

We were unhappy with the 'trust' company we went with on a self directed IRA. Slow, mistakes, poor communication - good luck getting useful information from the first line of people answering the phone, and good luck getting escalated to an actual person. After 2 years of being frustrated, we ended up going the Solo 401(k) route, but that may not be an option for folks, in which case the checkbook IRA serves similar purpose - putting you in control of the paperwork and payments.

Carl Fischer · Answer

@Jefferson Smith

I recommend you take a look at this bigger pockets list of SDIRA custodians and administrators. You should narrow down to the top 3 and call each of them and ask about their processing time, fees and some questions specific to the deal you are interested in for your Fathers SDIRA.

Brian Eastman · Answer

@Jefferson Smith

There are many quality self-directed IRA providers here on BP.  And yes, there is a lot of paid top-10 garbage on the internet that has been put forth by various gold or cryptocurrency dealers.  You can ignore that.

The first question is to identify the right type of provider and plan format, as there are several.  The type of investments your father will be making are going to determine the best tool for the job.

Self Directed IRA Custodians will typically have the word Trust in their name.  These are financial institutions that I like to describe as "E*Trade with different paperwork".  The administration and reporting on the account is the same, as dictated by law.  Instead of being focused on the public exchanges as the investing platform, however, they have the paperwork and staff training to document non-traditional asset holdings such as real estate, private placements, mortgages, etc.   As the custodian, they are a processor, and will hold funds, sign documents, issue payments and receive income at your direction.  All of this, of course, takes paperwork, processing time, and some combination of per-transaction, per investment and account-value based fees.  This type of service is best when the investments will be singular and static in nature, and when there is not a high need for legal guidance.

Self Directed Plan Facilitators are a different type of service that establish plans providing checkbook control.  There are two formats, either an IRA owned LLC called a "checkbook IRA" or a Solo 401(k) trust which is available to those who are self-employed and have no full time employees.  In either of these formats, the plan provider is performing legal structuring to put you directly in control of the funds and operating out of a bank account of your choosing under the umbrella of the plan.  You will have signing authority and the ability to directly make investments on behalf of the plan.  In addition to the plan setup, most quality providers of such services will offer meaningful support to help you navigate the tax code as you make investments.  For any kind of investing that will be time sensitive, involve multiple assets, or assets that generate a lot of transaction activity, these checkbook plans will be much more efficient and effective in terms of time, paperwork and expense.

As I noted, there are several quality providers of both types of services here on BP. Do some reading in the forums and reach out to a handful by phone.  You will quickly determine what type of service will best suit your father's needs and who are the quality providers.

George Blower · Answer

@Jefferson Smith

Take a look at IRA Services Trust Company. They have been in business since the 1970s, have a good reputation, have never had any IRS issues, have over 50,000 accounts and have fair fees.

Carl Fischer · Answer

@Michael Plaks

Thanks for mentioning me

Dmitriy Fomichenko · Answer

@Michael Plaks thanks for the shout out!

Larry Fried · Answer

I have a similar experience as @Caroline C. and rolled over from SDIRA to a checkwriting Solo 401k.  If a Solo 401k is not an option for an investor (requires having a solo business with income), then the upfront setup costs for checkwriting SDIRA is actually more costly, and only makes sense for larger retirement accounts.

For smaller accounts going with a SDIRA custodian might be the best (least expensive) option.  One of the biggest, Equity Trust is the one I had a poor experience with. From a crowdfunding company I invest with, I heard that Sunwest Trust is one of the easiest , no hassle custodians to work with, but I have no personal experience with them.  I believe they also have one of the better fee structures.

Elaine Hester · Answer

Hi @Jefferson Smith, I came across this post as I have essentially the same question and was hoping to find some recommendations for a SD IRA custodian from people who have actually done business with them.

I was in your position earlier this year and made a choice based on calling and speaking with a number of companies, as well as getting their rates. I found that what most offered in my area of need was pretty much the same across the board, but their rates varied quite significantly. I ended up going with what seemed to be one of the lower priced companies that is associated with one of the big real estate education companies, and came highly recommended by a large turnkey investment company that partners with them. We even met in person with the company's president and came to the conclusion that they seemed like a good choice.

What I found from actually working with them is that what they tell you and how they actually perform can vary quite a bit. The company I'm working with has missed stated turnaround times, failed to communicate on important matters, and let things fall through the cracks too many times already that I am tired of babysitting them and am now looking for a new custodian.

Since the ultimate list of SDIRA custodians is so lengthy, and have proved that talking to them doesn't necessarily tell you how they will perform, I am still looking for recommendations from people who have actually done satisfactory business with the company.

Let me know if you find a company that works out and I will keep you posted as well if I find someone!

Jefferson Smith · Answer

Thanks @Michael Plaks!

Recommendation for Self-Directed IRA administrator / custodian?

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