Rolling a Roth IRA over to a Self Directed IRA

[Lourdes Sanchez Wise]

Can someone recommend a good reputable company that holds SDIRAs? I'm looking to roll my Roth IRA over to a SDIRA and Fidelity does not (where I have my Roth).

Thanks

[Justin Windham]

@Lourdes Sanchez Wise

One of the decisions you will want to make is whether or not you want checkbook control.  

Self-directed IRAs typically come with a fairly low account setup fee from the custodian, but higher ongoing costs depending on the IRA asset value and transaction volume. Two common complaints among those who have these custodial accounts are:

1. The fee schedules are fairly comprehensive and fees add up quickly for higher value accounts or those with transaction-heavy real estate investments.
2. It is inconvenient to have to make requests to the custodian when a transaction needs to be processed and the wait times can negatively affect the acquisition or management of investments.

Adding an LLC to the self-directed IRA is a popular strategy to alleviate both complaints. A specially formed IRA LLC gives "checkbook control" to the IRA accountholder. This means that instead of having to instruct the custodian to process a transaction, the accountholder can simply write a check or initiate a wire transfer on their own, without any waiting. This also reduces the ongoing fees to the custodian, but will come with a larger setup fee to a facilitator, a company that forms these special LLCs and drafts the accompanying paperwork. The LLC will also generally involve formation and annual fees to one or more Secretaries of State. If a Solo 401k is not suitable for your situation, the self-directed IRA LLC is an excellent way to get direct control of your retirement funds.

As far as UBIT is concerned, many investors do not create any UBI to be taxed. If you have checkbook control and need help with UBIT, your LLC facilitator will be more helpful in making recommendations than an IRA custodian would if you do not have checkbook control.