You may already know all about having a Self-Directed IRA. You might know that investing this way means that you can invest in all sorts of alternative asset classes that a traditional arrangement might make difficult. That means investing in real estate, precious metals, private companies, private notes, and more. But what about the fees associated with this kind of arrangement? They must be too much to bear, right? Something only very wealthy people can afford? Well, you’d be surprised. Below, we’ll take you through everything you need to know about American IRA’s fees, as well as how this contrasts with some other companies that might not always do things this way.
Question: How do American IRA’s fees work?
Answer: With American IRA as your assets grow, your fees remain the same. With many other custodians, you might notice that as your number of assets grows, so too do your fees. But with American IRA, we’re set on creating a “fixed” fee structure. This means that you can add assets to the IRA without taking on additional fees.
For example, our “Basic Self-Directed IRA fee” is $285 per account, as per our fees page. This includes unlimited assets and unlimited account value, with a $95 charge per transaction. We define a transaction as the purchase or sale of an asset. In other words, you can keep adding to your account or simply let it grow and only pay the $285 annual fee.
This is very advantageous to an investor who wants to continue to add to a portfolio while letting the size of the fees in the portfolio shrink relative to the overall value in the portfolio. While other custodians might charge higher fees as you make more money, this can eat into your returns. At American IRA, we use a more straightforward structure.
Question: What about Transaction Fees?
Answer: As you saw in our previous section, there are additional transaction fees if you use our $285 option. However, you can unlock unlimited transactions if you want to work with a more stable set of fees every year and not worry about how many transactions you’re carrying out. Using our “Unlimited Account Fee” structure, you would then pay $450 per account per year, which unlocks unlimited assets, unlimited account value, and unlimited transactions. This might be what you had in mind if you were looking for custodian fees that were far less restrictive to the way you carry out business and you feel as though you are going to be purchasing and selling multiple assets a year.
Question: How do Other Custodians Handle Fees?
Answer: You’d have to ask them! However, it’s common practice for fees to go up as the size of the account goes up, which can be a big problem for anyone with a Self-Directed IRA who’s trying to build a lot of long-term wealth. After all, if the size of the fees goes up with the account, then it’s less incentivizing for the investor. But an investor who can build a large amount of wealth within a portfolio while paying less in fees relative to the size of the portfolio can put the maximum amount of that wealth toward their retirement.