You already know you have options for establishing your self-directed IRA. These choices are utilizing the services of a Custodian, an Administrator or a Facilitator. Learn more about the Facilitator business model including sample fee structures for two nationally-leading self-directed Administrators.
A Facilitator is normally a company that provides advice and consulting. They may call themselves facilitators, advisers, or consultants. Many Facilitators assist in structuring LLC components to the retirement plan which, through various documents, allows the client to have checkbook control of their IRA. It is common for investors to want to have “checkbook control” of their IRA funds, and Facilitators often fulfill this role. The Facilitator will typically assist in all aspects of the self-directed process that they are legally and morally able to assist with. While a Facilitator is not a Custodian, they will assist the IRA account holder in finding an appropriate Custodian for the IRA to hold the assets of the IRA. A Facilitator’s involvement should not be anything more than this and, if providing any further assistance for which they are paid (e.g., commissions on sales), they may trigger an IRS Prohibited Transaction.
“A Facilitator Ensures my IRA’s Compliance with IRS Prohibited Transactions” — Again, this would not be the case and you should be suspect of any Facilitator who makes such promises. If they do, you should always make sure that they are a capable tax or legal professional and have a written agreement on this role and potential fees associated with this service. Your IRA Facilitator is merely establishing the plan and may provide “consultative services” after the initial point of establishment of your IRA.
Want Checkbook Control of your IRA Funds? — You will have checkbook control of your IRA LLC with the assistance of a Facilitator. While the Facilitator typically charges a one-time fee for the establishment of the IRA LLC, they may also charge annual fees…so you will want to confirm what they may charge so there are no surprises. In general practice, however, a Facilitator should not be charging any annual fees with the IRA LLC unless they are performing additional services for that fee. In the case of the Facilitator, you should have a higher one-time fee than that of the annual fees charged by a Custodian and an Administrator. In theory, the Facilitator will advise that their one-time fee, when taking into consideration the cumulative total of the annual fees charged by Custodians and Administrators, will save their clients significant fees over a longer period of time. ROI on a Facilitator fee typically ranges from two to four years of what the Custodian/Administrator will charge in annual fees over that period of time.
Need your IRA Funds in a Timely Manner? — You will have it…..as typically a Facilitator business model will establish your IRA LLC so that you have full checkbook control of your IRA assets.
Facilitator Fees — AS already noted, a Facilitator’s fees are typically established as a one-time fee. If this is not the case, or if the Facilitator charges additional fees, you will want to establish exactly what you are paying annual fees for (as the IRA will be held by a custodian who will hold and report the assets of the IRA to the IRS).