Ep 211 - Specific Fee Questions for Self Directed IRAs

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And we also have Ben here with us because he's running the show here for the last number of episodes and we still have at least two more. Plus this one.

Yes.

And so this makes my job even easier. If I didn't think I could get it easy any easier, it just did. But welcome to another episode. And this, our podcast is called Freedom through Passive Income. You thought I was gonna forget. And again, we're towards the end of July. My birthday is tomorrow.

Yes.

And this is second to last day of fun shirt flippy. And this. If you're not watching, you're missing the. I like to. I call this one my old man shirt because it's got Corvettes all over it. This is the, this is. You can see the old man with the black socks and the sandals. That's. That's this shirt right here. One of my faves.

And you drove the Corvette?

I did. I. Of course I had to. It's requirement. When wearing the Corvette shirt, you must drive the Corvette. That's how it goes. And next week I'll be getting my Ferrari shirt. Like I said that in there.

No, no.

A boy can dream. A boy can dream. But welcome to another episode. This episode is entitled Specific Fee Questions for self directed IRAs. Also known as the Meat and the Taters. The Taters. The Taters. Meetin the Taters.

You're a goo ball.

But here you go, Holly.

Yeah. So just a reminder, Ben is here with our investor relations team. We have actually known him for years. He's a good friend of ours. So we worked on cruise ships together. So when you jump on the phone with him because we're going to have his contact information below because he's super, super wise. He's. He teaches us stuff all the time. But when you jump on the phone with him, don't ask him any cruise ship stories.

Oh, no, no, no.

He just. It's just a. No. No.

Yeah.

We're talking investment money, finances. No cruise ships.

Yeah.

Between the years of 1996 and 2004, those did not exist.

But anyways, we have known Ben for a very long time and he does really do. He teaches us stuff all the time. I get emails from him and I'm like, woo, mark that unread. I'm gonna have to read that like three more times. But it's really fantastic because he went through this process and we've been talking about wanting to have a series of episodes about, you know, self directed IRAs and how to use them and how to benefit from them. And Ben came in and saved the day with all the information. So, Ben, we're going to let you take it over yet again.

All right, so we're going to talk some taters today. See, I told you the meat and taters. And now, again, for context, if time is more important to you than money and the actual fees that we're going to discuss, these specific fees are not so important to you. The big takeaway from this podcast is make sure to ask your IRA custodian if you can use non IRA monies to be able to pay for the fees. So if you're like, hey, just whatever the fees are, just take care of me, but can I use my credit card with my personal money to pay for this? That'll preserve your IRA monies. And IRA monies are like gold. Would you agree with that?

Yes, 100%.

Absolutely. I had good friends of ours that she had about $90,000. They both. They had a lot of money, good amount of money, and she had $90,000 in her traditional IRA. She wanted to help her daughter buy a house, which is a wonderful thing for a mother to do. Well, she took her $90,000 of IRA money and just use it on house money. It's like, wow, wait a minute. This is, like, worth a lot of tax savings for you, which her husband's very much attuned to tax savings. So just again, for those of you that are not concerned about the fees, just pay for it with non IRA monies if you're allowed to. And if not, consider looking at another IRA custodian that will allow you to be able to do that. All right, let's talk about the meat and taters here. For specific fees. The first thing to remember, the first great takeaway is every fee that almost every fee that an IRA custodian will charge you is negotiable. Negotiable. So it never hurts to ask them, hey, can we waive this fee? Can we do it? And a good example of that is the administration fee. They will oftentimes say you. Most of them will say, hey, we have an administration fee for you to set up your account. You say, fantastic. Listen, I like all the things you're telling me. I want to become one of your clients. Can you waive this administration fee? You know, times I'll say, yeah, you know, and they might use that in negotiation. Yes. If you get started today, great, send me the form. Waive the fee. So usually they have the ability, the salesperson you talk to has the ability to waive the fee. That right there is worth 50 to $100.

Wow.

So yeah, that's, I mean that's like. And with that 50 to $100, you can buy a lot of swag.

Yep, that's right. Yes you can.

So administration fee, that's usually what they'll charge you to open the account. That's usually negotiable. They just make that up and it's something. Just help them with their office and you know, getting their initial paperwork on. Another fee to ask them about is their annual service fee. Now this can for a one size fits all type of project, you know, type of fee, and last podcast we talked about, you have two basic types of fees. One is a one size fits all, which will cover most of your fees with just one annual fee. And then you have the a la carte type of fee structure in which they'll charge you for each individual activity that they do for you. Well, their annual service fee, you want to find out what that is and just ask them. For most one size fits all companies, it'll be somewhere from $275 to $95 to $350. Some of them will go up to $450 and they'll say, hey listen, if you pay $450, it is going to be a one size fits all. We're going to, you move money in and out, we're not going to charge you for that. So a lot of the 275 to $295 annual fees, they'll still probably charge you a money movement fee. And we'll talk about that next. So just when you ask them what their annual fee is, the next question is, what does that fee not cover? And then they'll say, well, if you do this, if you move some money, if you do this thing over here, you open up a new investment, they'll tell you what it doesn't cover. That's important information for you to know. You want to ask them if there's a fee for you to move money in and out of your account or within your account. So they may charge you every time that you make a contribution to your self directed IRA, they're going to charge you $95 or $50. It's usually within that range, that 50 to $95 range. Sometimes they'll charge you to move money from your self directed IRA account into your investment. So for instance, if you invest in a debt fund or one of the new funds that we're setting up right now, they will say, okay, the money sitting there in your self directed IRA account and now you're saying you want to move let's say $50,000 into open up your direct, your debt fund, we're going to charge you a money movement fee for that. So you want to ask them about what fees they charge to move your monies around. Another question to ask them about is if they charge you a fee for the size of the account. So sometimes companies will say, okay, if your account's up to this level, we're going to charge you this much. If it's this much higher, we're going to charge you that fee. So they have a fee that can depend upon how much money you have in the account. Another fee they might ask you or they might charge you is the number of investments you have. So we're going to charge you for this investment. Okay, so if you have private money lending, okay, this is one investment, we're going to charge you for that. We're going to charge you also if you put money to the debt fund, we're going to charge you if you buy some gold coins. So ask them about the number of investments that you have and do they charge. Most of the IRA custodians will charge you per investment, but they will oftentimes not charge you if you add money to the investment. So for instance, the IRA custodian we're with, we have a position in the debt fund. When we take our annual IRA contributions, we can add that to that debt fund investment that we've already set up. They will not charge us extra money to move the fees in. So because that one investment they charge us the annual fee for covers that. So you want to ask these specific questions just so that you're not surprised by the fees for that. They also another question to ask a termination fee when you decide to close your account. Are they, how much will they charge you to close the account? Usually that's $200 to $300 that they'll charge you for that. Most companies charge that. Now once you ask these fee questions and we'll end with this, is that as questions to ask about the company itself. Now what are some questions that you would ask your self directed IRA company? What are some things you'd be curious about?

I want to know how long they've been in business.

How long and what always steal my questions and what does.

That indicate to you if you weather the storm, you know, if they've been around for a long time, then They've weathered the storm. They've proven themselves.

Okay, exactly. So they have longevity, and that's important. Longevity. You want to have the company with that. Is there any other questions come to mind when you think of questions you would want to know about your IRA custodian company?

I mean, the fees were a big thing for me because I was really glad that after talking about these episodes that you decided to do fees as a separate episode, because I didn't know that was negotiable. So I'm just gonna throw that out there. I was like, what? Those fees are negotiable? I'm the type of person goes, yes, yes, yes. Okay, I'll sign up.

Go.

Okay.

So all of that. But as far as the custodian itself, I would probably be looking at their reviews. I want to know, like, their history, longevity in the company, and then what are other people saying about them? And probably assets in our management.

That's a really good insight to know what other users experience are with it. So, for instance, a question you ask about fees is how often have they raised fees? And some of the companies will say, hey, we've been in business for 20 years. We've raised fees once.

Nice.

So how long has the company been in existence? A good question is how much do they have in assets under management? And this is usually if you're a billion or above, you're starting to get into a company that's getting some major funds with that. But that just shows how effective they are as a company in being able to reach out and find new clients. It can indicate how many clients trust them. So length of the company, number of assets, how often have they raised fees? We had a company we just switched from this past year that not only raised. It wasn't that they raised fees, it's that they changed their fee structure. So they went from a one size fits all into a la carte. We're like, whoa, wait a minute. Our whole assumption of doing business with you was one size fits all type of pricing fees. So that's another thing you talk about when you talk about reviews. And this is what we'll close with here is customer service. What type of customer service were they going to give you? Now, there's several indicators that you can get right away. One is how quickly did they pick up the phone?

Yes, that would be very important to me.

Some companies, you call and it goes straight into this automated voice system. Okay, here's your option, blah, blah, blah. Then you punch the option you want, and that rings several times and they say, can we, you know, just hang on a second. We'll be with you in a second. You know, in your two or three minutes, before you even talk to somebody, before they say, no, you've got the wrong department. You need to talk to so and so over here. So if they pick up right away, that's huge. Yes. That's a good indicator that they're probably going to be a very responsive company to you. Are they friendly and they pick up the phone, or do they sound like you've interrupted something?

Hello?

Are they helpful? And here's an interesting one. Do they listen to the question you're asking? Oh, yeah, sometimes you. Sometimes people in customer service, and it's true for all of us. At certain times, you'll hear a key word, and it's like punch in, you know, a playlist on your iPhone, you know, and suddenly the song just starts coming out of them. It's like, no, no, no, wait. You're in the right arena. But my questions over here. So do they really listen to your questions about what you want to do? And particularly when we're talking about things like the 506B fund, and you say, okay, I want to open up this IRA custodian. You know, I want to work with you because I want to invest in this 5 or 6B fund. Are they really going to listen to what type of investment that you want to do? Another indication is, as we talked about with the fee structure, are they going to try to nickel and dime you for every move? Are they going to charge you? For some of you, that might be fine. If you like the company, you like the level of service. But for others, it's like, hey, look, just charge me one fee. I don't want to worry about nickel and diming and figuring out what the fees are. So you decide on that. The final consideration is, do they offer ongoing education? Now, for instance, Freedom Companies, we offer a lot of ongoing education on the single family side as far as the multifamily side with Freedom Capital Investments. Well, a lot of IRA custodians have regular weekly type of education to keep you, as one of their clients, up to speed on the various options of what their services are for you. So those are things to consider not only about the fee questions, the specific fee questions, but also about the company itself that will help you decide which IRA custodian is a great fit for you.

Wow, this is one of my favorite episodes. I just have to say that. Mic drop. Thank you, Ben.

Don't drop the mic. Don't drop the mic.

We only have two.

Yeah. And you know, it's funny is, you know, you talk about the questions to ask the company and how many people and I'm looking at you out there and if you're not watching, I'm pointing at you. When you go to buy something on Amazon, do you look at the reviews? I mean, I bought something from my mom last week for her 87th birthday and I was like, let me read the reviews.

Yeah.

You know, and it was a $20 item or whatever and I spent, you know, 20 minutes reading those reviews. And but this is the same thing. You want to see the reviews of these companies, you know, to see if they have and they do what they say they're going to do because typically the reviews are from other customers and how they were serviced. But lastly, I'll leave you on this is that every time I hear somebody say ira custodian, I just think of this guy in a jumper with a big key ring, you know, and he's sweeping the floor. On that note, make sure you're heading over to our website, freedomcapitalinvestments.com and make sure you're joining our investor club. I don't even know why people even listen to me anymore. Oh my gosh. Thank goodness you're on this. We're on all the social medias and we hope that you're enjoying these episodes but we like to each and every episode with Invest Smart live happy. Bye everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss.

Sam.