Investment fees and your self-directed IRA

Investment fees are typical in maintaining your self-directed IRA. But not all investment fees are created equally. It costs money to administer the various types of investments that a self-directed IRA has at its disposal. Often times these costs, or investment fees, don’t come cheap. These types of custodial duties simply can’t be done in the context of a low-cost account.

You can expect to pay higher investment fees with a self-directed IRA custodian in order to receive expert management. IRA custodians may calculate fees differently, so here’s what you might expect to pay:

Annual account administration fee. Self-directed IRA custodians generally charge an annual fee to administer your account. This investment fee may be calculated in several different ways. For example, some custodians charge a flat fee for each individual asset held within the account. This could be the best choice if you only anticipate holding one or two pieces of real estate within your account, but it may be too expensive if you choose to hold many different assets.

A second technique for calculating the annual administrative fee is based on your total account value. This method may be preferable if you hold a large number of different assets that have a relatively low aggregate value, but this may not be the best approach if you hold one or two high-value assets.

Some custodians may offer a third approach that charges a higher flat fee but covers all administrative activities, regardless of the number of assets or their aggregate value. Quest Trust Company provides you with the highest level of flexibility by offering all three of these approaches so that you can pick the one that best suits your needs.

When you evaluate your choices, be sure to check exactly which services are included with your annual fee. With Quest Trust Company, you’ll get online account access, any required minimum distributions by check, and all annual tax reporting forms included at no additional cost, regardless of the pricing structure you choose.

Transaction fees. Even the “no fee” IRAs you might open with a discount broker will charge you transaction-based investment fees. You should expect to pay transaction fees whenever you purchase or sell an asset, as well as when you make certain types of withdrawals from your account.

Brokerage fees. If you are interested in using your self-directed IRA to invest in stocks and bonds as well as illiquid asset types, then you should check to see how your custodian charges for those routine investment holdings. For example, Quest Trust Company now allows you to include a standard brokerage account with Charles Schwab as part of your self-directed IRA. This means that you no longer have to choose between a low-cost IRA for trading stocks and mutual funds, and a self-directed IRA to hold assets such as real estate and precious metals.

Quest Trust Company helps change people’s lives and financial future through self-directed IRA investment education. Quest Trust Company helps people invest in what they know best and build their financial future on their own terms.