SD IRA: Minimum investment to make it worth the expense

[Drew M.]

I have an orphaned Roth IRA that I can't really do much with. There is a limited amount of money in it right now (let's say $10k for discussion purposes) and I don't expect to contribute more. I am considering going with a self-directed IRA and using the money to play with"alternative" investments such as tax lien certificates, distressed notes, etc. I am concerned that between the startup fees charged by an SD IRA custodian, the costs of forming an LLC (for checkbook control), and the annual fees for both that it will not be worthwhile.

My motivation is not so much to make big buck$$$ but I still don't want to just bleed the principal away on fees. Any comments or thoughts? Has anyone gone to a self-directed IRA with a small amount of principal?

[Steven J.]

Look into a self directed 401k as well. I've added a form comparing the 401k vs IRa self directed options in the fileplace. You're going to be limited with how much you can actually use of the 10k (for example a 401k allows 50k or up to half of your account). My sd401k was 1000 roughly to set it up and is intended to be used on smaller loans/purchases <50k for most cases. Definitely check out what you can contribute to 401k vs IRA, its a big difference.