Self-Directed IRA — Why an F May Be Better Than an A or a C!

Whether it be a self-directed Roth IRA, Traditional IRA or SEP IRA, learn why it might be important to you to save money on IRA custodian fees AND have full control of your IRA retirement plan and retirement savings. You see, in the world of self-direction, you typically have the options of utilizing a IRA Facilitator, IRA Administrator or IRA Custodian in establishing your self-directed IRA. Now, as you already probably know, all IRA’s must have a custodian for the IRA, but this is permitted with any of the three structures identified. And, a significant difference can result as it relates to fees for your plan. The main difference is whether you desire checkbook control of your IRA.

Typically, with an Administrator or Custodian model, the IRA account holder (you) does not have checkbook control of your IRA assets. Again, typically, the Administrator and Custodian model has annual fees which, while relatively minor to start, over a period of time adds up to thousands upon thousands of dollars in fees that you self-direct. In some respects, one can get “fee’d to death” and a certain amount of the fun and financial accountability with self-direction flows out the window. Plus, every individual should inquire of their administrator or custodian if either entity assumes responsibility for IRS-compliance with IRS Prohibited Transactions. If you believe they will protect you in this manner…think again.

In contrast, most Facilitators will charge a one-time fee in the establishment of your IRA with checkbook control features. Like the other models, the facilitator does not assume responsibility for your plan’s compliance with IRS regulations; however, I think you have learned that, regardless of the model, neither the Facilitator, Administrator or Custodian assume this role. Your biggest concern with the Facilitator model is choosing an individual/entity you trust is establishing the plan correctly AND whether you feel you can manage the plan in compliance with IRS code. Because, remember….at the end of the day, it is YOUR plan.

As always, this information is provided to be educational in nature and is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice. Please retain the services of such professionals.