Self-directed IRA custodians, similar to investment brokers and robo-advisors acting as custodians for regular IRAs, are present to cater specifically to this type of IRA.
An SDIRA is an IRA that allows for the ownership of alternative assets, specifically physical assets such as gold bullion and real estate. Additionally, it permits the inclusion of other types of assets that are typically not allowed in standard IRA accounts. Examples of these alternative assets include tax liens, private equity, oil and gas leases, peer-to-peer loans, and raw land, among others.
A custodian for SDIRA offers a location to store these assets. They do not engage in selling or selecting the assets you will possess. Rather, as the holder of the plan, it is your decision where to allocate your investments. The custodian will acquire the assets for your plan and retain possession of them until the point of selling.
The Entrust Group
The Entrust Group, which is based in Oakland, California, has been operating since 1982 and is considered one of the more reputable providers of SDIRA services in the industry. Presently, the company safeguards $4 billion in assets for 22,000 investors.
The company distinguishes itself by offering a wide range of asset classes available for investment. Apart from real estate, precious metals, and private equity, the platform also provides support for various other options such as arcades, art galleries, bowling alleys, cryptocurrency, crowdfunding, improved or unimproved land, life settlements, renewable energy, retirement homes, storage spaces, show horses, and vineyards.
Another option is to invest in renewable energy sources such as solar, wind, water power, and biofuels.
The company’s main area of expertise lies in real estate IRAs, which encompass various types of real estate investments such as single-family homes, office buildings, and mortgage notes.
IRA Financial Group
Since 2010, IRA Financial Group has been headquartered in Miami, Florida and has gradually expanded its operations to cover all 50 states. At present, the company boasts a clientele of over 28,000 individuals, who have invested more than $4.6 billion in alternative assets. With 67 employees situated in five different states, IRA Financial Group takes pride in being recognized as the fastest-growing SDIRA provider nationwide. Additionally, they distinguish themselves as the sole SDIRA custodian that does not impose transaction fees on investment activities.
The company collaborates with third-party providers to offer a range of services. For instance, banking services are provided by Capital One. All funds are kept with Capital One, which offers FDIC insurance of $250,000 per depositor (excluding investments made in your plan). Additionally, cryptocurrency investing is available through a partnership with Gemini.
Pacific Premier Trust Company
With its origins as PENSCO, Pacific Premier Trust now holds an impressive collection of almost 42,000 alternative assets, making it one of the industry leaders in this regard. It takes pride in being the pioneer of internet-based alternative asset custodianship, having commenced operations in 1994. Pacific Premier Trust was established in 1989 and is headquartered in San Francisco. Since 2020, it has functioned as a fully-owned subsidiary of Pacific Premier Bank, a financial institution valued at $20 billion.
Pacific Premier Trust Company not only offers alternative assets but also provides brokerage services for traditional retirement plan assets such as stocks, bonds, mutual funds, certificates of deposit, and others.
Equity Trust Company
Equity Trust Company, founded in 1974 and located in Westlake, Ohio, is the oldest SDIRA provider listed. The company asserts its position as the leading custodian for real estate investors, having facilitated the purchase, sale, and funding of more than 200,000 properties. Operating as a regulated trust company in South Dakota, Equity Trust is privately owned and subjected to rigorous account protection policies through independent third-party audits.
Equity Trust Company provides a wide range of investment options, including real estate, private equity, precious metals, cryptocurrency, oil and gas investments, livestock, agriculture and farmland, mineral rights, show horses, billboard signage, theatrical and movie productions, food trucks, equipment leasing, accounts receivable, royalty interests, and structured settlements, among others.
uDirect
uDirect, which has operated since 2009, is located in Irvine, California. Rather than focusing on a specific type of investment, the company offers a wide range of investment choices. They place emphasis on education and provide webinars to assist in learning how to effectively manage one’s self-directed IRA. The company equips individuals with the necessary knowledge, tools, and information for successful self-directed investing, but does not endorse any particular investments.
The firm was founded by Kaaren Hall, who is a single mom and has over 20 years of experience in mortgage banking, real estate, and property management. This includes working at Bank of America and Indymac Bank.
When comparing to other SDIRA custodians, uDirect has lower fees. The fees include a $50 set-up fee and a $50 annual fee. However, apart from that, you will only be charged storage fees ranging from $8 to $18 per month, which are very reasonable.
Rocket Dollar
Rocket Dollar, a SDIRA custodian, was established in 2018 in Austin, Texas. The company stands out in the field due to its provision of 24/7 email support and phone support during regular business hours, which is uncommon among SDIRA custodians.
There are two plans available, Core and Gold, both providing different features. The Core plan allows you to establish an LLC to manage your investments and offers online document storage, checkbook control, email support, and no fees for transfers or rollovers. Opening this plan does not require a minimum deposit.
The Gold plan includes expedited service and transfers, four free yearly wire transfers, an account debit card, a custom named LLC, priority support, tax filing for the 1099-R and IRS Form 5500, and assistance with Roth IRA conversion if required. Additionally, it incorporates all the features of the Core plan.
AltoIRA
AltoIRA, headquartered in Nashville, Tennessee, specializes in facilitating alternative investments in cryptocurrencies for your IRA. Through their collaboration with Coinbase, they offer access to over 80 different cryptocurrencies.
AltoIRA provides two plans, namely AltoIRA in Pro and Starter versions, along with AltoCryptoIRA.
Both versions of AltoIRA include account set-up, account funding, tax reporting, e-statement delivery, and Roth conversion at no cost. The primary distinction between the two versions lies in the fee structure. In the Starter version, there is a monthly account fee of $10, which can be reduced to $100 if paid for a full year in advance.
If you choose to pay the Pro version annually in advance, the monthly account fee is $250, otherwise it is $25.
If investments are bought and sold through preferred partners, both plans require a private investment fee of $10 or $50 per trade. With other partners, the fee is $50. In the Pro plan, there is always a $75 private investment fee.
Alto CryptoIRA provides the identical services as AltoIRA, while necessitating a monthly fee that varies from $2 to $25 and a trade fee of 1.5%.
For IRA investors, it is crucial to have a knowledgeable and trustworthy custodian for Self-Directed IRAs (SDIRAs). This ensures that investors have complete control over deciding where to allocate funds for alternative asset classes, ultimately determining the success of their account and IRA investor.
However, a self-directed IRA custodian’s sole responsibility is to hold and administer assets in accounts, without providing investment advice or selling investment products. The account holder carries the responsibility of adhering to the regulations and conducting thorough research on their investments.
However, self-directed IRA administrators and custodians have the responsibility of reporting and filing to the IRS for their clients. This requires them to be knowledgeable about the rules governing alternative investment classes, such as real estate IRAs. These investments can involve more intricate transactions, including rental properties, mortgage notes, and real estate shares in private placements.
Through extensive research and conversations with our clients regarding their decision to transfer their individual retirement accounts to IRAR Trust Company, we have identified three prevalent reasons that consistently arose. These are the key aspects that investors disliked the most about their former self-directed IRA company, as explicitly stated by our clients, listed in descending order.
#1 Lack of Industry Knowledge
The main complaint from clients in all sectors is the lack of industry knowledge. This revelation can be considered as fraud due to its substantial consequences. Clients have expressed their discontent with past custodians whose employees lack expertise. Consequently, individuals with self-directed IRA accounts have had to pay IRS fees due to errors made by custodians.
Mistakes are possible and inevitable when it comes to holding a self-directed IRA, which is why it is important to have a custodian who can identify and rectify any errors made. Without being aware of the mistake, it becomes impossible to correct it.
If a financial institution’s staff is not knowledgeable in certain areas, it can lead to investors losing all tax advantages or incurring costs that were intended to contribute to their retirement plan.
When conversing with an IRA custodian who is responsible for managing transactions for your IRA account, it is important to evaluate their knowledge and understanding of IRA investments. This assessment can be done simply by observing whether they can provide knowledgeable answers to your questions. Here are a few important factors to take into account.
- How often they need to escalate your inquiry to get you an answer?
- How fast do you get a response?
- When you speak to a manager, is that manager knowledgeable?
- Do they understand the type of investment you are interested in?
- Do they have any knowledge in buying real estate in an IRA?
- How long have they been in the industry?
The foremost source of frustration for IRA holders in relation to custodians is the absence of knowledge, which is a feeling that most people can understand. It is essential to rely on your custodian to perform their duties effectively in order to avoid penalties while planning for a financially secure retirement. An important aspect in safeguarding and increasing your account is locating an individual who possesses expertise in the field.
#2 Phone Trees Without Response
“It’s nice to not have to wade through a computerized phone system or be put on hold by clericals that don’t know what you’re talking about; experiences we were glad to leave behind with our previous IRA custodians.”
This particular example is being shared because it strongly supports complaint #1 – nobody enjoys being put on hold indefinitely or receiving no response. The client’s frustration is evident, and it is logical for an investor to prefer speaking to a person in order to have all their questions addressed thoroughly. Considering that the company has custody of your hard-earned retirement savings, it is reasonable to expect access to a real individual when necessary.
As a customer, it is a common and disheartening occurrence to receive false assurances that your satisfaction is important, only to encounter the complete opposite. We have all experienced the exasperation of being transferred between various individuals, departments, and levels of support. It feels like playing a game of chance, afraid of being disconnected before your problem is resolved.
When a company’s priorities do not involve providing you with knowledgeable assistance or they are more interested in upselling you on unwanted services or products, it becomes apparent that their bottom line is not in line with yours.
Instead of being subjected to a tedious and impersonal process of navigating through numerous automated phone options, we desire a personalized encounter when seeking answers to our inquiries. It is essential for us to feel valued and understood rather than being treated as mere statistics or profit sources. In any scenario, whether it pertains to an IRA custodian or your cable service provider, you have the freedom to switch to a provider who demonstrates expertise in their field and can provide you with precisely what you require, without unnecessary and costly additional features.
#3 Fees and Invoices
When it comes to invoices and fees, transparency is crucial. There are instances where self-directed IRA custodians lack transparency in their fee structure.
As account holders, it is important for you to have an understanding of what you are being charged for and the amount. It is crucial to know when money is being deducted from your account and comprehend the reasons behind it. If you are unable to access the specifics of your transactions or find them overly complicated, it is advisable to exercise caution.
When it comes to fees, a custodian needs to be transparent by providing information on when and how they are charged. It is important to carefully read the details on how these fees are managed. In general, the fees associated with your IRA account cover the administration of the retirement account as well as transaction fees for investment activities such as buying, selling, and wiring. However, it is crucial to understand the agreed-upon payment terms in advance.
It is important to be aware of the fees associated with your self-directed IRA from the beginning. Choosing the wrong retirement account or fee schedule can deplete your retirement funds just as quickly as you save them.
By staying vigilant about your account activity and balance, you can take steps to prevent significant fraud, even though you cannot control scammers or mismanagement. Were the investors effectively monitoring their IRA account activity? In addition, did they comprehend the invoice or statement? Upon calling to seek clarification on the charges, did they encounter a helpful and knowledgeable individual who could address their queries?
Regardless of the circumstances, bad actors will always find a way to deceive individuals. However, by vigilantly monitoring your account and carefully considering investment choices, you can take steps to safeguard your retirement funds from the most severe consequences.
Opening your account with a reliable self-directed IRA custodian is a crucial part of saving for your retirement. It is possible to open an account independently without the assistance of a financial advisor. It is also worth mentioning that even if you are already investing, it is never too late to transfer your funds to a company that aligns with your requirements.
When engaging in conversations with representatives, consider the following questions:
- Are they knowledgeable and know what they’re talking about?
- Is it easy to get a hold of someone who can help me?
- Are they clear and transparent about their fees and how they charge?
- If you are going to purchase real estate, are they well versed in self-directed IRA real estate investments including commercial real estate?
- Did they go over your investment options and tax benefits?
- Did they explain all their fees?
These are the types of questions that should be asked by every investor as they effectively expose the operational mechanisms of a company. Such insights can have a significant impact on the success or failure of a retirement account.
Is a Self-Directed IRA Right for Me?
If you are looking to buy a self-directed IRA, it is important to choose a custodian carefully. These custodians are not well-known companies and can differ in their practices from one another. These practices may be unfamiliar to investors who have no experience with them.
In this guide, the companies featured have been highlighted as they are some of the largest and most well-established SDIRA custodians currently operating. Out of the seven companies, five have received an A+ rating from the Better Business Bureau, which serves as a reliable measure of the customer satisfaction associated with each company.
However, further scrutinize any of these companies or any others you are contemplating. Begin the procedure by conducting a FINRA broker check and ascertain if any complaints have been lodged against the company or if there are any past or pending disciplinary actions.
It is important to consult both the Secretary of State in your jurisdiction and the Secretary of State in the jurisdiction where the custodian resides.
By using an online platform, you can easily check if a company is in good standing with the Secretary of State or if any disciplinary actions have been taken against it.
Ensure that, in addition to being confident in the custodian, you have a thorough understanding of the intricacies involved in self-directed investing in alternative assets, as it proves to be considerably more complex compared to investing through a typical retirement plan.
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