The purpose of self-directed individual retirement accounts (SDIRA) is to expand the options for retirement portfolios by including a wide variety of alternative assets. By opting for self-directed IRAs, knowledgeable investors gain the flexibility to go beyond the typical selection of stocks, bonds, and funds commonly found in traditional investment portfolios. Through pure self-directed IRAs, investors can establish investments in private placements, targeting any alternative asset that comes to mind, spanning from real estate and precious metals to digital currencies and everything else in between.
In order to fully utilize the power of a self-directed IRA, it is typically necessary to work with a custodian rather than a well-established brokerage, as the latter typically limit their SDIRAs to financial market assets. Unfortunately, the realm of alternative investments tends to attract untrustworthy individuals. When evaluating the top self-directed IRA companies, we focused on their assistance in establishing and managing legal obligations, as well as their reputation, investment options, and fees. It is important to mention that the account holder is ultimately accountable for conducting their own research on all investments and ensuring compliance with IRS regulations. As a result, this type of account is intended for investors with substantial investment experience. Top Self-Directed IRA Companies for 2023.
BEST OVERALL
Equity Trust
Equity Trust is considered the top self-directed IRA company due to its extensive experience, large scale, and efficient customer service. With a history that dates back to 1974, Equity Trust manages 237,000 customer accounts, which in total hold assets worth $39 billion. Moreover, the company boasts a dedicated team of over 400 associates who ensure exceptional client support.
Equity Trust, with a extensive background, is among the prominent non-bank custodians that provide self-directed IRAs to ordinary investors. Under the Equity Trust arrangement, you instruct the custodian to handle investments on your behalf, which implies that you do not possess direct checkbook control, unlike certain other self-directed IRA providers.
Equity Trust, like numerous other companies providing self-directed IRAs, has a strong foundation in the real estate sector. Many individuals find direct ownership of real estate to be a more secure option compared to traditional financial assets in the market. Leveraging its expertise in real estate, Equity Trust extends its support to niche investments such as private equity, promissory notes (private debt), and cryptocurrencies. Moreover, the company also offers standard brokerage options like mutual funds, stocks, and ETFs.
BEST FOR AUDIT PROTECTION
IRA Financial
Our choice for the best self-directed IRA company for audit protection is IRA Financial, as it handles all IRS reporting and administration for its customers, while providing unlimited IRA tax and consulting services. Additionally, IRA Financial offers a comprehensive IRS audit guarantee, ensuring that its structures will withstand legal scrutiny.
IRA Financial has been in the business for more than ten years since its establishment in 2010. Despite this respectable timeframe, IRA Financial still falls under the category of technology-driven disruptors in the field rather than reputable firms with extensive histories. The distinctive feature of IRA Financial lies in its strong audit guarantee and tax-related assistance, which can be credited to its founder, Adam Bergman, who is a former tax attorney.
At IRA Financial, our in-house tax professionals handle all IRS reporting and administration tasks on your behalf. For an additional fee of $299 per year, you can opt for our premium compliance service, which includes unlimited tax consulting, expedited support, audit guidance, and other benefits. Unlike many other IRA companies, we go the extra mile by taking responsibility for your audit, even though this enhanced service incurs an additional cost.
BEST FOR REAL ESTATE INVESTING
uDirect IRA
uDirect IRA got its start by specializing in SDIRA real estate investments. The company maintains that edge today, making it our choice as the best SDIRA company for real estate investing.
Our top pick for real estate investing is uDirect IRA, as it was established by professionals in the real estate field and provides a checkbook IRA that offers a diverse selection of investment options, predominantly focused on real estate assets like real properties, real estate notes, REITs, and tax lien certificates.
uDirect’s checkbook IRA not only offers a greater selection of real estate investments, but it also grants access to a diverse array of investment choices. These options encompass closely held businesses, private loans, accounts receivable financing, judgments, legal settlements, and precious metals. By having checkbook control, investors can promptly respond to real estate auctions and the availability of tax lien certificates.
The fees of uDirect SDIRA are quite reasonable. They include a $50 fee for setting up an account, and a mere $275 annually for record-keeping and reporting services. The charge for transaction fees is $35, but for the initial six transactions, there are no charges. Additionally, investors are required to pay a monthly fee of $8 to $18 for storing precious metals or currency.
BEST ONLINE PORTAL
The Entrust Group
The Entrust Group offers SDIRA clients a unique online portal that facilitates smooth transactional processes. Within this portal, Entrust Connect enables clients to explore various alternative investment options, making it the preferred choice for SDIRA companies with top-notch online platforms.
Since 1981, The Entrust Group has established itself as one of the most esteemed SDIRA companies in the field. What sets Entrust apart is that their services are accessible both directly to clients and through a financial advisor. Regardless of the chosen method, clients can avail an online platform for effectively managing their investments and exploring potential investment opportunities. Moreover, for investors seeking comprehensive retirement planning, the platform seamlessly incorporates its advisor portal with eMoney Advisor. This is precisely why Entrust is our preferred choice for the SDIRA company with the most outstanding online platform.
Entrust understands the importance of its role as a custodian and is dedicated to providing education to investors. They offer courses and a wide range of online content aimed at educating both investors and advisors on self-directed IRAs and alternative investments. The only drawback is that Entrust does not offer checkbook control, which would provide clients with greater investment flexibility. Nevertheless, they do offer resources to guide clients in establishing their own checkbook LLC.
Equity Trust has slightly higher annual administration fees compared to other similar companies, ranging from $225 to $2,250 depending on the number of investments or size of the account. However, they do not impose any transaction fees, which makes it a more economical choice for investors who expect frequent transactions. The fee for online account setup is $50, while it increases to $75 for those who opt for a paper application.
BEST INVESTOR EXPERIENCE
Alto IRA
Alto IRA, a newly established player in SDIRA investing, has developed a user-friendly and simplified automated system for investing in alternative investments, thus earning our recognition as the top SDIRA provider offering an exceptional investor experience.
Alto IRA has aimed to democratize SDIRA investing in alternative investments, empowering all investors who desire higher returns and diversification in their IRAs since it was established in 2018. Because of this, Alto tops our list as the SDIRA provider offering the finest investor experience.
For the majority of investors, it is usually difficult and somewhat costly to set up and invest in SDIRAs. However, Alto’s technology platform, which is both scalable and user-friendly, reverses this situation by providing an automated process that is cost-effective.
Alto’s platform offers investors a diverse selection of alternative investments, including partnerships with real estate lending firms, crypto exchanges, angel investing funds, and various other alternative investment providers. By utilizing Alto’s checkbook IRA, clients possess optimal control over their real estate investments for improved management. Apart from SDIRAs, Alto also provides support for traditional IRAs, Roth IRAs, and SEP-IRAs.
BEST FOR LARGER PORTFOLIOS
Rocket Dollar
Rocket Dollar, a comparatively newer player in the industry, has brought forth multiple innovations in SDIRA investing. These include the implementation of a fixed monthly administration fee of $15, which is especially advantageous for those with larger portfolios.
Having been established in 2018, Rocket Dollar has quickly established itself as a prominent player in the SDIRA industry. It offers comparable investment opportunities and user-friendly features to other top contenders. However, for investors with sizeable portfolios, such as those with IRA rollover accounts or SEP-IRAs and Solo-401(k)s making substantial annual contributions, Rocket Dollar can be the most economical choice in terms of SDIRAs.
Rocket Dollar automatically sets up clients with a checkbook LLC, giving them access to a wider range of investment opportunities. Alongside traditional alternative investments such as real estate, precious metals, cryptocurrencies, and private equity, Rocket Dollar has collaborated with various crowdfunding platforms to present crowdfunded real estate and peer-to-peer loans as additional options.
Rocker Dollar’s fee structure is distinct and appealing to investors with significant portfolios as it does not vary based on the size of assets invested. Rocket Dollar implements a fixed monthly fee of $15. Although its setup fee of $360 is higher than that of most competitors, it is a one-time charge. Investors desiring premium services have the option to pay a setup fee of $600 and a monthly fee of $30 for a Rocket Dollar Gold account.
Frequently Asked Questions
What Is a Self-Directed IRA?
A self-directed IRA essentially has the same rules and restrictions as an IRA obtained from a major broker. Although some traditional brokerages may provide an option called a self-directed IRA, this usually confines the investor to selecting from the usual financial market investments.
Companies that serve as custodians offer a more refined form of self-directed IRA in which account holders have complete authority over purchasing decisions and can invest in any assets that comply with IRS regulations. This allows individuals to explore opportunities in real estate, private placements (such as shares in private companies), and private loans. Moreover, private placements can be made in entities that are solely focused on owning particular assets like precious metals, Bitcoin, or foreclosed properties. Thus, the flexibility of these investment options is predominantly subject to the IRS limitations on self-dealing.
Who Should Get a Self-Directed IRA?
Self-directed IRAs are suitable for individuals with expertise in a specific alternative asset that cannot be utilized effectively in a traditional IRA. An instance would be if you possess real estate investments and desire to expand them through a retirement account, in which case a self-directed IRA is an optimal option. Additionally, self-directed IRAs are beneficial for seasoned and/or accredited investors seeking assets that have lower correlation with the financial markets.
Alternative assets have a higher risk and higher potential return. In addition, financial regulators have observed that self-directed IRAs are prone to fraud due to limited custodian responsibilities. If you are not thorough in investment research, self-directed IRAs might not be suitable.
What Does a Self-Directed IRA Cost?
The costs of a self-directed IRA can vary depending on the company offering the services and the features included in the account. Some SDIRAs charge a flat rate, while others combine flat fees with annual fees based on the size of the account. In the companies reviewed, setup fees range from $0 to $999, and annual fees range from $100 to $2,250. Some SDIRA companies also impose transaction fees, which can range from $10 to $250 per transaction. It is crucial to compare the costs with the level of service provided and the type of self-directed IRA (whether it is an LLC or not) to determine if the fees justify the services you plan to utilize.
Methodology
Selecting the appropriate SDIRA custodian is crucial due to the fact that self-directed IRAs allow investors to explore investment options beyond stocks, bonds, and funds. In assessing various reputable SDIRA custodians, we have emphasized important factors such as investment choices, checkbook control, fees, reputation, and the level of assistance provided in establishing and handling legal duties.
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