Self-Directed IRA companies

[Steve Sprowls]

I've looked at six different companies and the fees are all over the place. The cheapest so far is Sunwest Trust. Their annual fee is $225 regardless of the number of assets. Their application fee is $50. Am I getting too concerned about the fee price? Is there a customer service aspect that I need to pay attention to that warrants paying higher annual fees? Has anyone had dealings with Sunwest Trust? TIA

[Brian Eastman]

@Steve Sprowls

Fees are important, but they are only one aspect of the equation in evaluating an IRA custodian. And, cost and quality of service do not go hand-in-hand, unfortunately. The most expensive player in the industry seems to spend all that money on marketing and not on quality staffing or customer service. I'd put SunWest about in the middle of the pack on both counts based on

Also of importance is what kind of self-directed plan you intend to establish. Custodians (generally "trust companies") are simply processors. They hold the account and can document investments made by the account into both conventional and non-traditional assets. They hold the funds, sign the documents, and handle all income and expense transactions for the benefit of your IRA and at your direction. This intermediary model works OK if your investment goals are pretty singular and static in nature, but not so well if your investment goals will be more dynamic or time sensitive.

An alternative approach is plans offering checkbook control such as the IRA LLC or Solo 401k. While a custodian may be used as the back end in the IRA LLC, they do not typically create the entity or provide advisory support. Adivsory and/or legal firms typically provide these types of plans. Such a plan will cost more to establish initially, but will eliminate processing delays and per-transaction fees charged by a custodian in the future.

There is lots of good information here on BP on all of these service options.  Regardless, look for real client feedback and recommendations.  Marketing a service is one thing, actually providing quality is another entirely.