Self-Directed IRA Fees - Compare Custodians - Low Fees

Q: What are the fees for a self-directed IRA?

Fees for self-directed IRAs vary. They can range from $199-$2,000. Fees also depend on your strategy and how many assets you hold. In order to get the best rate for your strategy, compare custodians before you open an account.

Understanding Self-Directed IRA Cost and Fee Structures

Set Up Fee

Most SDIRA custodians have a one-time setup fee for establishing your account. This fee can range from $50 to $300 depending on the custodian or provider. It can also vary depending on your investment types. Providers that create IRA LLCs for checkbook control are usually higher in cost. You should also take into account any annual LLC expenses. By the way, it's not required to create an IRA LLC to invest in real estate.

Annual Fee

Custodians charge an annual fee based on the asset type or its value, others may provide an "all-inclusive" fee but still charge additional transaction fees. Make sure you read the fine print, there is no such thing as a no-fee IRA or no fee retirement account.

Transaction Fees

Transaction fees include buying, selling, transferring funds, check requests, etc. Depending on how many transactions you make a year, this can add up.

When it comes to real estate, there is a fee to purchase the property, wire of funds, and some custodians also charge a fee for making the earnest money deposit (EMD). Find out what's included in the purchase fee.

Other Self-Directed IRA Services Fees

If you have an online "self-directed IRA" through a big bank (Fidelity, Charles Schwab, Merrill Edge, etc.) more than likely this is not a truly self-directed IRA— one where you can invest in all types of alternative assets including real estate. Usually, these platforms allow the buy and sell of stocks or mutual funds. It may be a commission-free, automated investing platform, but you may still be paying for the use of an online brokerage system, Robo advisor, or trading fees. There is a big difference between a self managed individual retirement account vs. a self directed individual retirement account— know the difference.

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Some of the transaction fees that may be incurred during a real estate purchase are; processing the buy request, a notary service fee, and wire fees. Some custodians charge a fee for processing the earnest money deposit, and non-recourse loans.

When your IRA owns real estate there are expenses that are associated with the property. For example, taxes, utilities, HOA fees, etc. These fees must be paid from the IRA. In most cases, the custodian will charge a check fee to make these payments on behalf of your IRA.

To get a low fee self-directed IRA, be sure to compare the costs for transactions as well as new account fees and annual fees. Download the free template to get the BONUS Real Estate IRA Fee Worksheet!

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Fees By Alternative Asset Type

As an investor, the ability to invest in alternative assets within a self-directed IRA can be a powerful tool. However, most investors do not recognize that this power comes with certain fees— or rather, several if you don't compare custodians first.

The most overlooked fees are periodic "administrative costs" charged by type of alternative asset in the IRA. For example a quarterly asset maintenance fee for private equity investment may be different from one for tax liens. These hidden fees by asset type can add up and end up being a problem for investors. But since most alternative investment custodians charge fees, you should consider the total fees associated with the type of investment or asset before making investment decisions.

Alternative investments can be a valuable and diversifying part of a well-rounded retirement account. Often, they can provide investors with the opportunity to achieve higher returns than more traditional assets such as stocks and bonds. Before you decide which alternative investments to add to you retirement account, it's important to understand the costs associated with the type of investment. It is just as important to discuss your self-directed investing strategy or investment goals with a financial advisor that understands alternative investments.

If you're looking for a self-directed IRA company or IRA custodian with low fees for alternative investments, you need to consider IRAR.

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Self-Directed IRA Fees FAQs

What are the fees for a self-directed IRA?

Fees for self-directed IRAs vary. At IRAR the flat annual fee is $199 for one asset, $274 for two assets. Other SDIRA custodians can range from $199-$2,000. Fees also depend on your strategy and how many assets you hold. In order to get the best rate for your strategy, compare custodians before you open a self directed retirement account.

Are self-direct IRA custodian fees tax deductible?

IRA fees paid to the custodian to maintain your IRA may be tax-deductible if you file itemized deductions on your tax-return. Also, these must have been paid with personal funds and not from the IRA. Compare Custodians to get the best fees for your self-directed IRA.

What fees are normally associated with a self-directed IRA?

There are 3 types of custodial fees that are usually associated with a self-directed IRAs; New Account Establishment Fee, Annual Fee, and Administrative or Transaction Fees. However, some custodians charge other fees per asset, per quarter, etc. In order to get the best rates for your strategy, compare custodians.

Are the fees for a Roth IRA or Traditional IRA different from self directed IRAs?

A Traditional IRA, Roth IRA, SEP IRA or SIMPLE IRA can all be self-directed. The fees can vary depending on the custodian and types of investments in the IRA. For example, a Roth IRA Fee at Fidelity may be different from a self-directed Roth IRA fee at IRAR.

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