Equity Trust Self Direct IRA Reviews?

Question

Hey BP Friends!

I'm looking at rolling my 401k into a Self Directed IRA to purchase real estate. I am leaning toward Equity Trust. Has anyone used this company or have any feedback (positive or negative)? Thanks!

Scott Johanek · Answer

@George Blower @Glenna Wood Thanks so much for the detailed feedback! I will take a look at a solo 401k as well as Madison Trust.

Account Closed · Answer

@Scott Johanek

Hi Scott, I don't have any experience with Equity Trust but when I was doing my research three years ago to roll my 401K into a SDIRA I went with The Entrust Group. They have been around a long time, there prices seemed right and I couldn't find anything negative about them. I set up an LLC so that I could control the checkbook and I only pay Entrust $295 a year to be the custodian. I highly recommend them. Whoever you do go with, make sure you get checkbook control. Good luck, make sure you do your homework as there are prohibited transactions that you have to be aware of but it's pretty easy once you learn what you can and can't do.

Justin Windham · Answer

@Scott Johanek

Did you decide on a direction yet? Interested to know how it works out for you. Best wishes.

Scott Johanek · Answer

@Taylor L. I intend to invest in Single Family Real Estate. Mainly focused on the BRRR strategy or seller financing.

Glenna Wood · Answer

I did not have a good experience with Equity Trust as my sdira custodian for processing payments for the simple mortgage I held as an asset and the fees were high. I moved to Madison Trust before setting up a check book LLC for RE investments and have been very happy with them. As others have already said, your asset and investment choices affect the services you need from your custodian. Devil is in the details.

George Blower · Answer

Here are some issues to consider:

1. Confirm that the provider has experience with the particular investments in which you intend to invest your retirement funds as you very likely will have questions in terms of the mechanics (e.g. how do you invest in real estate, etc.).

2.  Confirm that the provider has a pristine reputation (e.g. Better Business Bureau reviews, etc.).

3. If you want to have checkbook control (vs running transactions through the IRA trust company), the IRA account will need to be at a trust company that will allow the IRA to invest in an LLC (where you will be the manager and your IRA will be member - an as manager you will have checkbook access to the LLC bank account). Therefore, you will want to confirm that the trust company allows for investing in an LLC and the associated fees and minimum balance that applies to the IRA account.

4. If you decide to pursue an IRA LLC structure, confirm that the IRA LLC provider will prepare all of the documents needed to not only form the LLC (articles of organization, SS-4 to obtain an EIN) but also the documents needed by the trust company to process the investment of IRA funds in the LLC.

5. In addition, if you are self-employed with no full-time employees you may wish to consider opening a Solo 401k instead of a self-directed IRA as it has several advantages over an IRA LLC such as much higher contribution limits, direct checkbook control (i.e. no need to have the account at a speciality trust company), ability to take a 401k loan, exclusion from unrelated debt finance income tax with respect to investment in real estate acquired with non-recourse financing, etc.

Taylor L. · Answer

What are you planning to invest in? Some companies seem to be better prepared for certain asset classes over others.