SDIRA recommendations requested

[Kelley Joyce]

Hi! Does anyone have any recommendations for a good Self Directed IRA custodial administrator? I'm wanting to buy some mortgage notes. Also, does anyone remember the name of the SDIRA that exhibited at BPCon 2023 in October? Thank you!

[Jeff S.]

“Does anyone have any recommendations for a good Self Directed IRA custodial administrator?”

You unknowingly confused a few important terms in your question, @Kelley Joyce. There are IRA custodians and there are IRA administrators. These are not the same. By law, all IRA funds must be held by a custodian. Depending upon whether they are a bank or a trust company, custodians are heavily regulated by the IRS, DOL, possibly the FDIC, State Banking Commissioner, and the Comptroller of the Currency. Administrators are not subject any to such scrutiny and are really just middlemen.

An administrator will pass your funds to a custodian, provide statements, and hopefully help you stay within the law when you invest your IRA funds. Custodians do exactly the same thing but with the added regulatory and financial scrutiny. If you have an issue, your administrator might toss your problem to their custodian who may or may not help or even care about you. Why would you place your money with an administrator?

Maybe not perfect, but you can tell if you are dealing with a custodian rather than an administrator because they will usually have the word "Trust" in their name or they will be a bank or brokerage. If it's not clear to you, then ask. And if you don't think that it matters, take a look at what happened to those who placed their IRA funds with American Pension Services, an administrator. Maybe read this thread too.

Fees are also a consideration, which is how these firms make their money. Some IRA custodians charge by the transaction, some charge by the total value of your account, and some by both. All publish their fees so you can use a spreadsheet to determine the lowest-cost solution.

For example, if you are flipping houses and have a lot of relatively small dollar transactions, then pick a company that charges by the value of your account. If you expect to do relatively few higher dollar transactions, such as buying notes, you might pick one that charges by the deal, etc. What works for me, might not work for you, so be careful when others recommend a specific company. Especially if you don’t know their investment strategy.