Recommendations for a Self-directed Roth IRA Custodian - Equity Trust anyone?

Question

Hello! Looking for advice and suggestions for a Roth IRA Custodian

I'm looking to roll over a traditional IRA to a Self-directed Roth by the end of the year, and use that for my investing. I had a long conversation with Equity Trust today, and I'm almost ready to move forward with them, but upon further investigation they seem to have some pretty negative reviews. Has anyone here used them for a Roth? Any feedback positive or negative would be appreciated!
Or suggestions for other companies that provide a similar service? Seems like the Roth is the way to go - I want to choose the right partner!
TIA all!

Patrick Young · Answer

Regarding solo 401k, maybe this is slightly off topic, I use equity trust and they say you cannot have any employees other than a spouse. The IRS seems to hedge on this and I see other custodians marketing say you cannot have full time employees. ET says no employees period, even if part time.

I generally see literature as such, and cannot tell if having a part time employee removes the chance of solo 401k or if the custodians just don't want to deal with it:"IRS rules prohibit contributions to a solo 401(k) if you have full-time employees, but you can use the plan to cover yourself and your spouse into retirement."

Daria B. · Answer

Hi Kelly,

I am currently with Equity Trust not by choice since they bought out Midland Trust last year (2023). Midland had my accounts both ROTH and IRA for several years. My investments were all what they termed private placement and was essentially funds used for lending, buying notes and recently land trust.

After MIdland sprun this on us, my spouse also has accounts, I did some research but didn't see a purpose to remove our accounts at the time.

I have not been with ET long enough to give comment on them and what little "issues" occured were technical. I do not know how they are handling new customers verse the Midland existing customers.Regarding the customer service it seems the people I dealt with are still employed and only my "personal rep" as it were, was promoted and another took her place. So I do deal with one person or at least have that person I can email or call. When I had any questions they responded quickly or as reasonably quickly as they could. Mostly it was when I wanted to fund an investment. I learned enough (in summary) what they needed to do their job in getting my funding to make it easier on myself. They worked with me and had no issues explaining the steps and documents they needed from me. I would hope the ET if none are from Midland also do the same.

I am now on quest to learn the pros/cons of and SDIRA under a bank vs a trust company custodian. When I did open my SDIRA back when, I had done a lot of research but I guess I missed the understanding or knowledge of banks also having SDIRAs. Since they (banks) have FDIC protection and these other "trust" custodian do not I am now looking at how to protect what we have. No one recommended a bank at the time for the SDIRA, it was only trust companies as the custodian.

Cheers.

Brett Synicky · Answer

@Daria B. got it!   If you have checkbook control you’ll have a bank account with a bank that has FDIC insurance up to $250k per account.  Not per checking account but per Ira LLC which is the “relationship” with the bank.  Technically as the manager of the LLC you can open an accout with any financial institution though they don’t all cooperate when it’s an IRA owned LLC. Some banks can spread your funds around to multiple banks if you carry a balance over $250k and want to have all the necessary FDIC insurance…merry Christmas!

Daria B. · Answer

When I opened my account (2018) it was with specifics in mind and now I am reevaluating. It has definetly been a good choice from what I was doing.

Cheers...

Brett Synicky · Answer

Technically any bank can operate as an IRA custodian but they don’t all do it.  There are companies like midland used to that will act as custodian.  I think what you’re referring to is a checkbook IRA so you can bypass the custodian when performing transactions/investing and all assets/accounts will be held in the name of a special purpose LLC or Trust which is the instrument that gives you checkbook control.  Happy hunting!

Brett Synicky · Answer

@Kelly Taylor who doesn’t like tax free atm withdrawals?  the more Roth the merrier!  Have you looked at a solo 401k?   Roth and pre-tax built in so makes Roth conversions simpler among other things.  What do you wish to invest in?

Ashish Acharya · Answer

@Kelly Taylor If you are going to invest more in RE, wait until you have released losses to do the Roth conversion.

Using a self-directed Roth IRA offers tax-advantaged growth, but choosing the right account type is essential. A Roth IRA allows for tax-free growth and withdrawals if account rules are met. Converting a traditional IRA to a Roth triggers taxes on the converted amount, so plan accordingly. Gains within this account are tax-free if rules are followed, but avoid prohibited transactions to maintain account integrity. A Solo 401(k) may be advantageous for self-employed individuals, offering the potential for participant loans, higher contributions, and no custodian fees, as well as higher contribution limits and the option for tax-deferred or Roth contributions.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Jaime Raskulinecz · Answer

If you're anything like me, customer service is the main draw for me when I am choosing any service provider.

Look at websites, reviews and testimonials. Call the offices of some of the custodians that interest you and see how the phones are answered. Is it an automated voice attendant, is it a call center where you are routed to someone else eventually to get an answer, or is it a live, well trained staff member?

Decide what is important to you and choose the custodian that offers it. While fees are pretty similar between custodians, read the fee schedules carefully as there are sometimes others fees charged that aren't readily discernible.

Good luck and happy holidays!

Jaime

Recommendations for a Self-directed Roth IRA Custodian - Equity Trust anyone?

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