Solo or Independent 401K

The True Path to Total Financial Freedom              

Power Chapter

Self Directed IRA Custodians (Almost) Obsolete and Unnecessary 

To be fair, Self Directed IRA Custodians are (almost) obsolete and unnecessary because Self Directed IRAs are (almost) obsolete and unnecessary.  What do IRA Custodians do for you that you can't do for yourself?  With the advent of the Solo or Independent 401K, the only record keeping you need is the standard record keeping you would use for any transaction. And it is only after your 401K grows to $250,000 or more must you file form 5500 EZ.  And form 5500 EZ really is EASY!!

Ed S., one of my clients, started with an IRA of about $300,000.  Converting it to a Solo 401K, then investing in real estate, he grew his account by $100,000 per year.  Compare what the largest IRA custodians would charge compared to the costs of his 401K.

The following are the fees that would be generated by an account like Ed's starting with $300,000 and growing by $100,000 per year. The fees are based on each company's fee schedule available on the Self Directed IRA website. This lists seven of the largest custodians (with the most assets under custody).  Find the entire list HERE.

Coming Attractions

IRA Custodians' Fees

Custodian 1

Year Balance Annual Fee
2013
      $300,000              $850
2014
      $400,000
          $1,050
2015
      $500,000
          $1,350
2016
      $600,000
          $1,500
Four Year Total
          $4,750

Custodian 2

(fees on page 25)

Year Balance Annual Fee
2013
      $300,000            $675
2014
      $400,000
           $975
2015
      $500,000
        $1,600
2016
      $600,000
        $1,700
Four Year Total
        $4,950


Custodian 3

Year Balance Annual Fee
2013
      $300,000             $765
2014
      $400,000
            $955
2015
      $500,000
         $1,145
2016
      $600,000
         $1,275
Four Year Total
         $4,140



If Ed only maintains at this level, and doesn't grow his IRA a penny, he will spend over $1,000 per year.  This doesn't count all the other fees each custodian applies to various transactions.

Some custodians Fee Schedules don't lend themselves to easy analysis.  in Ed's case, he bought, fixed, and sold three houses at various times each year.  Each flip earned his 401K $30,000 - $35,000 per house.  Because the holding times per house all varied, it would be impossible to determine the actual dollar cost in fees for the following marketers.

Other Services

Custodian 4

Custodian 5

Custodian 6

Custodian 7

Your TA 401K

You

Year Balance Annual Fee
2013
      $300,000              -0-
2014
      $400,000
             -0- 
2015
      $500,000
             -0- 
2016
      $600,000
             -0- 
Four Year Total
             -0- 

You

Year Balance Annual Fee
2013
      $300,000                 -0- 
2014
      $400,000
                -0- 
2015
      $500,000
                -0- 
2016
      $600,000
                -0- 
Four Year Total
                -0- 

You

Year Balance Annual Fee
2013
      $300,000                 -0- 
2014
      $400,000
                -0- 
2015
      $500,000
                -0- 
2016
      $600,000
                -0- 
Four Year Total
                -0- 

No Fees. Ever. Regardless of transactions. Regardless of size. You keep everything you earn.


All the companies list fees for transactions that may or may not occur within you Solo 401k.  The following is a partial list with prices that occur for you. Those that would be imposed by your local bank or brokerage firm are marked "BANK."



You

Purchase or Sale of Assets                            -0-
Cash Disbursement/Distribution                     -0-
Administration                                                 -0-
Asset Maintenance                                         -0-
Asset Holding                                                  -0-
Transactions (All)                                            -0-
Wire Transfers                                                BANK
Deeds                                                            Title Company