Ah, you have done all your research on self-directed IRA plans, you learn about all the IRS regulations and Prohibited Transactions affecting both IRA and 401K plans, and you even are trying to determine whether you should establish a Roth IRA or possibly do a Roth IRA conversion with your current funds.
Undoubtedly, in your research, you quickly learned that any IRA account must have the assets held by an IRS-approved IRA custodian. It doesn’t matter whether the IRA is self-directed or not…it doesn’t matter if it is a Traditional IRA, Roth IRA, SIMPLE IRA or SEP…all IRA’s must be “held” by a custodian. So, how can you escape a custodian requirement?
Through a 401K plan…self-directed or not.
With the 401K, you can establish yourself as the trustee of your plan. You can assign the responsibility of trusteeship to another individual or entity. However, you can escape the custodian requirements that plague an IRA.
Is this the best thing for you? Only you can determine that. However, for those of you who have an interest in establishing a self-directed IRA, you will ALWAYS have a custodian fee. In contrast, if you are establishing a self-directed 401K plan, you CAN escape many of the fees that a self-directed IRA….especially custodian fees.
You may think this doesn’t add to much money in IRA custodian fees. Would you be surprised that even with a “low fee” IRA custodian, over the course of time you invest your IRA assets, you will face thousands of dollars in fees. IF you qualify for a self-directed 401K (yes, unfortunately, there are people out there who think you do not have to qualify for such a plan), you CAN establish your plan with no custodian fees; therefore, potentially saving those thousands of dollars you would have otherwise had to spend with the IRA and increasing your ROI.