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Individual Retirement Account (IRA) investors seeking higher returns and more diversification are increasingly turning to self-directed IRAs (SDIRAs). That's because SDIRAs allow investors to own assets beyond the typical stocks, bonds, ETFs, and mutual fund investments that can be held in a traditional IRA. By investing in such assets as real estate, closely held businesses, precious metals, foreign currencies, private loans, cryptocurrencies, and commodities, SDIRA investors who are willing and able to assume more risk can potentially earn much higher returns.
However, SDIRAs are not for everyone. While they do offer investors more control and flexibility over their investment choices, they require a high level of investment knowledge and savvy well beyond the capacity of most investors. Plus, unlike traditional IRAs, which are relatively straightforward, setting up, managing, and investing in SDIRAs can be somewhat complicated. That's why it's vital to work with an SDIRA company that has the experience and resources to guide investors through the process.
We reviewed a dozen of the top self-directed IRA companies using key criteria such as investment options, fees, ease of account setup, and customer service to identify the best in six different categories.
The 6 Best Self-Directed IRA Companies of 2023
- Best Overall: Equity Trust
- Best for Audit Protection: IRA Financial
- Best for Real Estate Investing: uDirect IRA
- Best Online Portal: The Entrust Group
- Best Investor Experience: Alto IRA
- Best for Larger Portfolios: Rocket Dollar
Investors should always do their due diligence on a self-directed IRA company before moving funds into it. Not only do these accounts have more stringent IRS rules, but the industry also attracts fraudulent companies that prey upon investors.
Best Overall : Equity Trust
As an SDIRA provider since 1984 with over $34 billion in invested assets, Equity Trust has forged the right combination of experience, investment capabilities, and customer focus to stand out as the best overall SDIRA company.
Extensive experience as SDIRA custodian
No transaction fees
Personal client support through 400 specialists
Access to traditional investments (i.e., stocks, bonds, ETFs)
Administrative fees on the high end of the spectrum
No checkbook control
In the competitive SDRIA arena, experience counts, and Equity Trust has a lot of it. It has put its hindsight to work in creating a well-rounded offering supported by superior customer service, making it our choice as the best overall SDIRA provider.
Equity Trust's initial foray into SDIRA investing centered on real estate investments. It has since branched out into the full spectrum of alternative investments, including private equity, precious metals, tax lien certificates, cryptocurrencies, and foreign currencies. Established initially as a securities firm, Equity Trust also offers SDIRA investors access to stocks, bonds, and ETFs.
While its annual administration fees ($225 to $2,250 depending on the number of investments or size of account) are a bit higher than some of its peers, Equity Trust doesn't charge any transaction fees, making it more cost-efficient for investors who anticipate more than a few transactions in their accounts each year. The online account setup fee is $50. It's $75 if set up with a paper application.
The one downside to Equity Trust is it doesn't offer checkbook control. Clients have to issue directions to Equity Trust to invest funds from their accounts. While that can be cumbersome for clients who want more control over their cash, clients can access more than 400 specialists to help facilitate transactions.
In addition to the specialists who are also available to assist clients throughout the setup, investing, and maintenance process, Equity Trust provides excellent educational tools to help clients understand their investment choices.
Best for Audit Protection : IRA Financial
Investing in SDIRAs can invite IRS scrutiny, but IRA Financial has your back if you are ever subjected to an audit, making it our choice as the best SDIRA firm for audit protection.
Online educational resources
Low annual custodian fee
Cumbersome account setup process
Founded in 2010, IRA Financial is gaining traction in the SDIRA space by differentiating itself as the only firm to stand by its clients should they come under an IRS audit, making it our choice as the best SDIRA for audit protection.
Between the structuring of an SDIRA and the transactions that occur inside them, their complexity can invite IRS scrutiny, which is why it's essential to know you're working with a firm that is willing to stand by you. The firm was established by a team of tax specialists with a deep understanding of the myriad rules and restrictions governing SDIRAs.
IRA Financial offers a checkbook IRA providing access to a full array of alternative investment options, including real estate, precious metals, private equity, private loans, foreign currencies, and cryptocurrencies. IRA Financial offers SDIRAs without checkbook control, but their checkbook IRA offers far more investment options and is more cost-effective.
There is a one-time establishment fee of $999 for opening a checkbook IRA LLC, and clients pay an annual custodian fee of $360. You'll pay no transaction fee when you buy, sell, or exchange an investment.
Setting up an SDIRA with IRA Financial can be somewhat cumbersome. While the process can be started online, it requires some extra steps that must be completed by phone with the help of an IRA Financial account specialist.
What IRA Financial might lack in their setup process, they make up with reliable customer service. Clients have access to customer service reps via online chat and phone. Clients also have access to many educational tools and investment-specific guides to help them understand the different types of investments.
Best for Real Estate Investing : uDirect IRA
uDirect IRA got its start by specializing in SDIRA real estate investments. The company maintains that edge today, making it our choice as the best SDIRA company for real estate investing.
Extensive expertise and resources for real estate investing
Low annual administrative fee
Setup process not very streamlined
Founded by real estate experts, uDirect IRA offers a checkbook IRA with a wide range of investment options but with a strong tilt toward real estate investments such as real property, real estate notes, REITs, and tax lien certificates. That makes uDirect IRA our choice as the best SDIRA company for real estate investing.
In addition to a wider variety of real estate investments, uDirect's checkbook IRA provides access to a full range of investment options, including closely held companies, private loans, accounts receivable financing, judgments, legal settlements, and precious metals. With checkbook control, investors can more quickly react when real estate auctions take place and tax lien certificates become available.
uDirect SDIRA fees are very reasonable. They charge a $50 account setup fee and just $275 annually for record-keeping and reporting services. Transaction fees are $35, but your first six transactions are free. Investors also pay $8 to $18 per month for precious metals or currency storage.
Account setup is reasonably routine with uDirect. You can start the process online, but you will need to print and sign documents, which can be scanned and uploaded through the website. Once underway, accounts can be managed online. Clients have access to online education resources, including investment guides on various assets. uDirect also provides phone and online customer service support.
Best Online Portal : The Entrust Group
SDIRA clients with The Entrust Group have access to a proprietary online portal that allows them to conduct their transactions seamlessly. Entrust Connect, a section within the Entrust Client Portal also provides an opportunity to connect them with numerous alternative investments, making it our choice as the SDIRA company with the best online platform.
Extensive experience as SDIRA custodian
Tool to access client-sourced investment options
Online portal integrates with financial planning tools like eMoney Advisor
Administrative fees at the higher end of the spectrum
Checkbook control must be established outside of Entrust
Since 1981, The Entrust Group has grown into one of the most reputable SDIRA companies in the industry. Entrust is unique in that clients can access their services directly or through a financial advisor. Using either avenue, clients can access an online platform for managing their investments and searching for potential investment options. The platform also integrates its advisor portal to eMoney Advisor for investors who want to do more holistic planning for retirement. That's why Entrust makes our choice as the SDIRA company with the best online platform.
Entrust takes its role as custodian seriously and goes out of its way to educate investors, offering courses and a broad library of online content designed to educate both investors and advisors about self-directed IRAs and alternative investments. The one downside is Entrust doesn't provide checkbook control, which offers clients more investment flexibility. However, it does provide resources to assist clients in setting up their own checkbook LLC.
Fees charged by Entrust are in line with other SDIRA companies. It charges a $50 account setup fee, as well as annual administrative fees based on the number of assets held in the account or the size of the account, ranging from $199 to $2,299 annually. Transaction fees charged for any purchase, sale, or exchange of an asset can range from $0 to $250.
Account setup is relatively straightforward with Entrust, taking less than 10 minutes to open and fund. Accounts can be set up directly with Entrust or through an independent financial advisor. In either case, clients have to establish an LLC on their own if they want checkbook control. Entrust will help in that process, but clients maintain it on their own. Entrust's customer service is above par with a team of in-house professionals, and clients have access to a suite of investor education tools to help them make informed decisions.
Best Investor Experience : Alto IRA
A relative newcomer to SDIRA investing, Alto IRA has created an easy-to-use, streamlined, automated process of investing in alternative investments, making it our choice as the SDIRA provider with the best investor experience.
Technology platform streamlines investment process
Quick, easy online setup
Somewhat complicated fee structure
Deal sponsors are required to create an account
Since its inception in 2018, Alto IRA has set out to democratize SDIRA investing in alternative investments to empower all investors seeking greater returns and diversification in their IRAs. For that, Alto makes our list as the SDIRA provider with the best investor experience.
Typically, setting up and investing in SDIRAs can be complicated and somewhat expensive for most investors. Alto's scalable technology platform flips that for investors with its user-friendly and cost-effective automated process.
Investors have access to a wide range of alternative investments through Alto's platform, which partners with real estate lending companies, crypto exchanges, angel investing funds, and many other alternative investment providers to facilitate investment opportunities. Using Alto's checkbook IRA, clients have maximum control for better management of their real estate investments. In addition to SDIRAs, Alto supports traditional IRAs, Roth IRAs, and SEP-IRAs.
Alto always wanted to make SDIRA investing affordable for most investors. There are two price tiers: the Pro at $25 per month and the Starter at $10 per month. You can pay these annually to save two months worth of fees. The Pro plan allows you to bring your own deal while the Starter plan limits you to investments within Alto's partner network. Alto boasts many investment partners, though access may be limited for those with the Starter plan. Fees apply to investments including $10 to $50 for partner investing and $75 for private investing.
Alto's account setup is streamlined through an online, automated process—quick and easy. Clients benefit from the same technology for managing their accounts and facilitating transactions. Its customer service is multi-faceted with online and phone support.
Best for Larger Portfolios : Rocket Dollar
Another relative newcomer, Rocket Dollar has introduced several SDIRA investing innovations, including a flat $15 monthly administration fee, which works out particularly well for larger portfolios.
Low fee structure favorable to larger portfolios
Quick, easy account setup
Automatically sets up checkbook control
Supports self-directed solo-401(k)
Only been in operation since 2018
High setup fee
Founded in 2018, Rocket Dollar has already made its mark in the SDIRA space. As for investment availability and ease of use, it competes with the best. But for investors with larger portfolios—think IRA rollover accounts or SEP-IRAs and Solo-401(k)s with larger annual contributions—it can be the most cost-effective SDIRA.
With Rocket Dollar, clients are automatically set up with a checkbook LLC, which provides them with more investment opportunities. In addition to the standard alternative investment options of real estate, precious metals, cryptocurrencies, and private equity, Rocket Dollar has partnered with several crowdfunding platforms to offer crowdfunded real estate and peer-to-peer loans.
Rocker Dollar's fee structure is unique and can be very attractive to investors with larger portfolios because there is no sliding scale for costs based on the amount of assets. Rocket Dollar charges a flat fee of $15 a month. Its setup fee is $360, which is higher than most of its peers, but at least it's a one-time fee. Investors who want premium services can pay a $600 setup fee and a $30 monthly fee for a Rocket Dollar Gold account.
Clients can set up their SDIRA online in under 10 minutes with no minimum deposit. Clients can access customer support through their RocketDollar.com dashboard. Gold customers can call a special support line at any time. All clients have access to the account service team for help connecting with any of Rocket Dollar's investment partners.
What Is a Self-Directed IRA?
A self-directed IRA (SDIRA) is a specialized account set up through a custodian or administrator that allows you to invest in many different types of alternative investments. Popular investment choices include real estate property, precious metals, closely held companies, cryptocurrencies, tax liens, and private loans. Aside from that investment flexibility, SDIRAs are similar to traditional IRAs, with the same tax advantages and contribution limitations.
Because custodians don't provide investment advice, investors are on their own to perform the necessary due diligence on investment options. That's why investing in SDIRAs can be especially risky. In addition, the rules and restrictions for setting up and investing in SDIRAs can be complicated, which poses an audit risk with the IRS. SDIRA investors should always consult with a tax advisor when setting up or investing in an SDIRA.
What Does a Self-Directed IRA Cost?
Most SDIRA custodians charge three sets of fees: A setup fee, an annual administrative fee, and a transaction fee. For the custodians in our review, the setup fee ranges from $0 to $360. Most custodians charge an annual administrative fee based on a sliding scale of the investment account size, ranging from $150 to more than $2,000. A few of the custodians in our review charge more competitive administration fees, ranging from a flat monthly fee of $15 to a flat annual fee of $360.
Most custodians also charge a transaction fee, typically between $35 and $250, per buy, sell, or exchange, depending on the transaction's size. A couple of the custodians on our list don't charge a transaction fee.
Who Should Get a Self-Directed IRA?
An SDIRA is best suited for experienced and savvy investors who aren't satisfied with the returns or diversification available through traditional investments. Investing in alternative investments offers the opportunity to earn higher returns, but they come with commensurate risk. Many alternative investment options are restricted to investors with a higher income or net worth. But there are plenty of investment options available to smaller investors, but it is their responsibility to understand the risks.
How We Chose the Best Self-Directed IRA Companies
Because investor preferences and needs can vary widely, choosing the right SDIRA custodian is critical. We reviewed a dozen of the top SDIRA custodians based on several factors. We screened all companies based on their reputation in the industry. Then we drilled down on such critical factors as the range of available investment options, whether they offered checkbook control, and the ease of account setup. We also considered the competitiveness of their fees as well as the quality of customer service. We then narrowed our choices to the best SDIRA custodians for their appeal to investors in six different categories found to be the most important to investors.
Equity Trust. "Equity Trust Company Streamlines Precious Metals Investing with Groundbreaking MetalsConnect Platform."
Internal Revenue Service. "Retirement Topics - IRA Contribution Limits."