Choosing a self-directed IRA company is not like choosing a bank or a brokerage. The decisions you make at this stage affect your investment options, your fee costs over time, and how smoothly you can execute transactions in alternative assets.
National Directed Trust Company (NDTCO) is a self directed IRA company that specializes in alternative asset investments. As a self directed IRA company, its role is to administer the account, process transactions, maintain compliance records, and help investors hold assets that traditional custodians typically do not allow.
This guide explains what self-directed IRA companies do, how they differ, and what to look for when comparing them.
What a Self-Directed IRA Company Is
The term “self-directed IRA company” generally refers to a custodian or trust company that is approved by the IRS to hold IRA assets and that specializes in allowing account holders to invest in alternative assets.
All IRAs require a custodian. Banks, credit unions, and brokerage firms typically serve as IRA custodians, but they limit the investment menu to products they offer. A self-directed IRA custodian, by contrast, allows account holders to direct investments into real estate, private company stock, precious metals, private lending, cryptocurrency, and other assets that the IRS permits but standard custodians do not facilitate.
The IRS defines what a self-directed IRA cannot hold, not what it can. The prohibited categories are narrow: life insurance contracts, collectibles such as art and antiques, and S-corporation stock.
Beyond those, the investment universe is substantially open.
How Self-Directed IRA Companies Make Money
Understanding fee structures is one of the most important parts of choosing an SDIRA custodian, because fees compound over the years and meaningfully affect your net return.
The most common fee models:
- Flat annual fee. A fixed dollar amount per year, regardless of account size. This model benefits investors with larger account balances because the fee does not scale with assets.
- Asset-based annual fee. A percentage of the total account value is charged annually. This model is straightforward for smaller accounts, but can become expensive as account value grows. A 0.5% fee on a $500,000 account is $2,500 per year.
- Transaction fees. Charged per investment transaction, per purchase or sale. These fees vary based on the asset type and can add up quickly in accounts with frequent investment activity.
- Combination fees. Many custodians charge a base annual fee plus transaction fees. Reading the full fee schedule before opening an account prevents surprises.
Ask specifically about: account setup fees, annual maintenance fees, fees per transaction for each asset type you plan to invest in, fees for processing income or expenses on held assets, and fees for annual fair market value reporting. There is rarely a single-line answer, so read the full schedule.
What to Look for When Comparing Self-Directed IRA Companies
Not every SDIRA custodian handles every asset type equally well. A firm experienced in precious metals may process real estate transactions slowly.
A firm built around real estate investing may have limited experience with private equity subscriptions. Matching the custodian to your primary investment focus matters.
- Asset type specialization. Ask which asset types represent the majority of their accounts and transactions. A custodian that processes 10,000 real estate transactions per year has infrastructure and experience that a custodian processing 200 does not.
- Transaction processing times. Real estate closings, private placement subscriptions, and wire transfers all have deadlines. Slow custodial processing can cause deals to fall through. Ask specifically: how long does it take from receiving a purchase direction to wiring funds? Honest custodians give you a specific timeline, not a vague range.
- IRS approval and compliance. The IRS maintains a list of approved nonbank custodians. Confirm that any custodian you are evaluating appears on that list or has an equivalent qualification. Operating outside that approval is a regulatory problem you do not want to inherit.
- Educational resources. Self-directed IRA rules are complex, and the consequences of prohibited transactions are severe. A custodian that provides clear guidance, written educational materials, and proactive communication about compliance is a meaningful advantage over one that simply processes transactions.
- Customer service model. Find out whether you get a dedicated account representative or whether inquiries are handled by a general queue. For complex transactions with multiple parties, a dedicated contact who knows your account is worth paying a premium for.
The Prohibited Transaction Rules You Need to Understand Before Opening an Account
The single most important thing to understand before investing through a self-directed IRA is the prohibited transaction rules. Violating these rules can cause the IRA to lose its tax-exempt status for the year of the violation, making all IRA assets taxable and potentially subject to early withdrawal penalties.
Prohibited transactions involve the IRA and “disqualified persons,” which include you, your spouse, your parents, your children, your grandchildren, their spouses, and entities they control.
Specific examples of prohibited transactions:
- Buying property from or selling property to a disqualified person
- Lending money to a disqualified person using IRA funds
- Using IRA funds to benefit a disqualified person in any way
- Receiving compensation for managing or working in a business that your IRA has invested in
The SEC notes that self-directed IRAs carry a heightened risk of fraud because custodians do not evaluate the legitimacy or quality of investments held in accounts. Thorough independent due diligence on every investment is the account holder’s responsibility, not the custodian’s.
Questions to Ask Any Self-Directed IRA Company Before Opening an Account
- How long have you been operating as a self-directed IRA custodian?
- What is your full fee schedule, including all transaction fees for my specific asset types?
- How long does a typical real estate transaction (or private equity subscription) take to process?
- Do I get a dedicated account contact, and how do I reach them?
- What happens if I have a question about whether a specific transaction is a prohibited transaction?
- How is my annual fair market value reported to the IRS for illiquid assets?
- What is your process for handling required minimum distributions when IRA assets are illiquid?
A custodian who answers these questions clearly and specifically, without evasion or marketing language, is one who operates transparently. That transparency is the most reliable indicator of a custodian worth working with over a multi-decade retirement investing horizon.