Due Diligence Tip #1 – Avoid Self-Directed IRA/401k Custodians

When converting to a Self-Directed IRA/401k, the reason to avoid custodians is simple. Well, there are 4 reasons really.

UNNECESSARY DELAYS

With a custodian, you give custody of your retirement funds to yet another financial institution who acts as a middleman. This means when you request a transaction, you have to wait for them to process it.

LIMITED INVESTMENT OPTIONS

Because the ultimate “approval” of each requested transaction is up to the custodian, many of your 100% legal transactions get denied due to company policy or just due to the discretion of one of their employees. The whole point of self-directed investing is to reclaim control of your funds YOURSELF, isn’t it?

AUTOMATIC CONFISCATION

As the U.S. government continues to look for funding sources, several pieces of proposed legislation would “nationalize” your retirement accounts. Because a custodian is directly chartered and regulated by the government, your money would instantly disappear in the event of “nationalization.”

HIGHER COSTS

You’d think with confiscation vulnerability, limited investment options, and unnecessary delays… that custodians would be the cheapest solution, right? Well, they lure customers in with low setup fees (typically $50), and then on average their maintenance fees (automatically taken out of your retirement account) are usually thousands of dollars per year and TENS OF THOUSANDS of dollars per decade.

Avoiding custodians unlocks the pathway to REAL control of your investments. No delays, no investment limitations, no confiscation vulnerability, and extremely low costs. Speak with a representative now at 877-903-2220 or find out more here.

Reader Interactions

Comments

  1. Can you give us your opinion on the probability of confiscation of IRAs and your opinion on how soon it could happen?

  2. Hi Jeff. I went with your company a few years ago to set up a self directed IRA. At that time you were encouraging the use of Sunwest Trust as the custodian. The only thing they hold is my LLC balance which is just a number on paper. Even so, am I still vulnerable to the governments whim as you mention above? BTW, I continue to brag about my success with my IRA. I am forever grateful to you and your company.

  3. I have been in the business of helping people with self directed retirement for 5 yrs. I have worked with several custodians. I communicate with an officer of the association of custodians. You are certainly taking some misconceptions and blowing out of proportion . Some of these concepts you present might be possible, but they are certainly not common place. There are laws that would prevent them from developing into issues unless someone was trying to deliberatly circumvent the laws. These are unprofessional scare tactics, why are you doing this?

  4. I’m seriously looking into a solo 401k plan to better manage my retirement funds and reduce taxes. However, I’m afraid to make a mistake because I’m not finding very knowledgeable people to help me, and that includes my accountant that was a CID IRS agent for 35 years.
    It is also very difficult to trust sales people, since in most cases their only motivation is to earned a commission.
    After reading some literature on the subject of solo 401k’s, it appears to me to be a very good investment vehicle for me.

    What suggestion can you give me to remove the fear resulting from the knowledge limitation that I and my financial providers have regarding this subject.

  5. Jeff, I am considering setting up a IRA LLC. I live in California. Will I need to file complete tax returns for the new LLC or is there another way to pay the manditory $800 annual tax on the LLC? Thanks for the help.

  6. I totally agree conceptually that when you can, it’s good to maintain full control of your own money. But the facts are clear: Not everyone qualifies for a self-directed 401k and thus must use a self-directed IRA if they want that type of control. As such, they have no choice but to use a qualified custodian in order to have an IRA, as it’s required by federal law.

    • We agree with you completely that the SDIRA is the best choice for those who don’t qualify for the Solo 401k. The great news is that more people can qualify than ever before because more Americans are stepping into small business ownership. Our Solo 401k accountholders are everything from part-time Uber drivers to 7-figure consulting practices. In the industrial era, starting a small business was a daunting task (building leases, equipment rental and staff, oh my!). In the era of the Internet, more Americans are taking control of their financial future both by creating streams of self-employment income and by reclaiming control of their hard-earned retirement funds 🙂

      Sincerely,

      Rachel
      Solo401k.com and Nabers Help Team

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