Looking for an IRA custodian

[Luke Fouch]

I’ve read most of the posts about self directed IRAs and just need a custodian or broker to work with. The broker managing my traditional IRA has no experience with them. Any guidance to choosing someone to help me invest my IRA in real estate?

[Brian Eastman]

@Luke Fouch

Self-directed retirement plans come in a few flavors.  The first step in selecting a provider that will suit your needs hinges on several factors associated with your investment goals, situation, etc.

A self-directed IRA custodian is a processing agency. Think E*Trade with different paperwork. With this type of service, the custodian holds the funds and then executes your instructions for any transaction. They then sign any documents, issue funds, receive deposits, etc. This involves a fair amount of paperwork and delay, in addition to generally nominal per-transaction fees. This model is well suited for a portfolio with one or two relatively static assets such as private placements, crowdfunds, etc.

If your interest is investments that are more time-sensitive and transaction intensive over time, such as direct ownership of a rental property, then you will want to look into a specialty provider that offers a Checkbook IRA LLC or Solo 401(k) program. In these cases, a legal structure is formed under the umbrella of the plan, and you then use that entity to hold funds in a bank of your choosing and directly engage in transactions without 3rd party intervention. Such programs will generally cost more to setup, but will save you over time in both expense and frustration. And, when you work with a quality provider instead of just a document mill, you will have access to guidance with respect to the operation of your program and compliance with IRS guidelines.

Providers of both kinds of services are active here on BP. Do some reading and call a few of each type to see what will best suit your needs.