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. Self-directed accounts typically involve fees for buying and selling assets like real estate, precious metals, or other alternative assets. On the other hand, self-managed accounts may incur fees for investment advice, management services, and other services.
