When it comes to retirement savings, the Self-Directed IRA is one of the best ways to achieve a new level of control and flexibility. Self-directing means that you, the investor, can move money you earned from income sources and put it directly into a retirement account that lets you choose where you want the money to go. When you work with a Self-Directed IRA Custodian—the party who serves as administrator on the account—you can easily issue buy and sell orders within the account in a wide range of retirement assets, from real estate to precious metals.
But that still leaves one question. How do you choose the right Self-Directed IRA Custodian for your approach? Here’s what you’ll need to know.
Learn the Basics of the Self-Directed IRA First
Before you get started, let’s brush up on the basics. A Self-Directed IRA is an investment style, but not a unique type of account. You’ll still be using familiar retirement accounts like Roth IRAs, Traditional IRAs, and more. The self-direction we refer to here addresses how you will manage the account—working with a Self-Directed IRA administration firm who serves as custodian on the account.
Whenever you have a retirement account, this is the same essential setup—for example, a retirement account with a popular brokerage still means you’re giving buy/sell orders. But choosing a more independent Self-Directed IRA Custodian means you can have access to the full range of retirement asset classes available to you. These asset classes are always valid retirement investments, provided that you follow the rules—but it’s only through choosing a Self-Directed IRA administration firm who can serve as custodian on these investments that you enable yourself to make them.
How to Choose a Self-Directed IRA Custodian
When it’s time to choose your Self-Directed IRA Custodian, you then have to consider a few important factors. For example, we think these are two of the most important factors that anyone considering a Self-Directed IRA should take into account:
- Pricing structure. How does the Self-Directed IRA administration firm handle its pricing structure? Do they offer a flat rate on the account, giving you unlimited transactions within the account? Or do they want you to pay more as you acquire more assets? Does the fee go up the more money you have in the account? If the fees are dynamic, that can eat into your potential retirement returns over time. You’ll generally want to choose a Self-Directed IRA Custodian that can offer more static fees.
- When you land on a Self-Directed IRA administration firm’s website, what kinds of experience do you see from the leadership team? Are they people who have been doing this a long time, or does the Self-Directed IRA administration firm seem more like a recent endeavor? You are, after all, investing for the long haul. You’ll want a team on your side that is also in it for the long haul.
Consider the Kind of IRA You Want
Finally, it’s time to consider what kind of account you can and want to use. For example, a SEP IRA has a high contribution limit—but is only available if you have a business. A Roth IRA is another great account, but has limits when it comes to the kind of income you’re currently earning. You’ll want to think through the type of IRA you’ll use.