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Author: meowkittymeow Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75870  
Subject: Experience w/ self-directed IRA custodians? Date: 2/9/2007 8:12 PM
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Maybe this topic has been discussed, but I couldn't find it. So...

Does anybody have experience with and/or recommendations regarding self-directed IRA custodians? (And by "self-directed" in this context, I mean a custodian that allows private placements in LLCs [or investing in real estate or whatever]. So, a stock brokerage doesn't count.)

The basic summary of my situation is this: there's an LLC into which I want to invest IRA money. This would be the 1 and only investment I figure on making outside of the regular stock market. But making a "private placement" investment requires an IRA custodian that allows such oddities. These custodians exist, but there don't seem to be very many, and they seem frankly a bit esoteric -- including their fee structures.

So, I wonder if any Fools have some Foolish experience they can share. If so, have you hit any "hidden" fees that were outlandish? And whatever the fees, how satisfied are you with the company as a whole?


Here's the list of such IRA custodians that I've found thus far:

"The Entrust Group" - mostly a flat fee structure, but with a 0.5% termination fee. In my case, it looks like it would cost: $145 initially, plus $250/year. Apparently the termination fee has no cap; so let's say my IRA ends up with $1M, they would take $50K when I close the account! :-O

"Equity Trust Co." - fee based on asset size. In my case, it looks to cost: $50 initially, plus $440/year -- but that would change with the (hoped-for) growth of the assets over time. Apparently no termination fee.

"Pensco Trust" - fee based on asset size. For my case: initially $50; annual about $550 (again changing over time), plus an unstated amount for administration of the required "Cash Reserve Account"; termination $150 flat.

"Trust Administration Services Corp." - flat fees. For me, initially $55; annually $85; termination capped at $300.

"Guidant Financial" - flat fee, but I'm not sure what it is yet. Looks like only $130/year for the custodial part. However, Guidant mostly sets up an LLC for my IRA. That part is a one-time fee, which I don't know how much it is.

There's also a "FiServ", but their website was sufficiently dense that I didn't even want to try to find the fee structure. And also a "Trust America" which didn't list fees [so far as I could find, anyhow].


Any thoughts about these companies? Do you know of others worth checking into?

Thanks,
Meow


PS: Hmmm... not sure if this detail is necessary, but for the curious, I'll supply it:

The overall steps are thus:
1. Create an IRA account at a self-directed IRA custodian.
2. [Optionally, create my own LLC.]
3. Rollover the desired $ from my existing IRA account at my stock brokerage, to the newly-created IRA.
4. Invest from the new IRA to the LLC.
5. [If step #2 is taken, invest from my LLC into the target LLC.]

Hope that makes sense. [To state the obvious, one must be careful not to violate IRS regulations with any of this -- esp. with creating one's own LLC. That's what lawyers are for.]
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