If your NDTCO account holds non-precious metals assets, you likely pay annual fees on a per-asset or per-value basis. It’s also probable that you weighed these fee options prior to your initial self-directed investment and chose the more financially pragmatic model. However, your investments may have since grown such that your original fee structure no longer presents a cost-cutting advantage. To help prevent overspending on account fees, NDTCO allows you to switch between the per-asset and per-value fee models. This can occur on the anniversary of your first transaction. Let’s review a few examples that may highlight opportunities to reduce your annual expenses by switching your NDTCO fee schedule.
Could you save money by switching fee schedules? Send our staff a message through the Client Portal and we’ll help you make it happen!
NDTCO Fee Schedule Examples
- John acquired a $100,000 piece of real estate on behalf of his self-directed IRA in November 2013. He chose the per-value fee schedule, so his administration fee was $262.50 per year (account value between $90,000 and $124,999.99). By 2016, John’s IRA had accumulated $50,000 in rent payments and the property had appreciated to a fair market value of $130,000, bringing his total IRA value to $180,000. The account performed nicely, but John’s annual fee also rose to $325.00 (account value between $125,000 and $249,999.99). Once November—the anniversary month of his first investment—came around, John was able to adopt the $295.00-per-asset fee schedule. $295.00 is more than he would have paid in 2013 ($262.50), but it’s less than the $325.00 of the per-value fee schedule.
- John later decided to re-allocate his IRA’s rental profits and diversify his portfolio with a new asset. A friend of his needed capital for a new business venture, so John offered a private loan of his tax-advantaged retirement dollars. If we fast forward to November 2017, the IRA-owned property has appreciated to $150,000, an additional $15,000 in rental income has been yielded, and John’s friend has re-paid $10,000 of the note. As such, John’s IRA is now worth $175,000. The loan counts as a second asset in John’s account, bringing John’s per-asset annual fee to $590.00. John could therefore switch back to the per-value fee schedule, as the $325.00 fee has become the cheaper option.
- Sarah’s IRA owns three properties valued at $250,000 each. Her per-value fee would be $925.00 (for an account value of $750,000 or more) while her per-asset fee would be $885.00 (three assets at $295.00 apiece). This being the case, Sarah may consider switching to per-asset if she isn’t already on that fee schedule.
- If Sarah sells one property for $250,000, her account value would still be $750,000 but it would only hold two assets. This would bring her per-asset fee down to $590.00, which would provide substantial savings against the $925.00 per-value fee.
Stay in Touch with NDTCO
Please understand that we may not recommend or endorse any particular course of action in your self-directed investing strategy. We are, on the other hand, happy to review your options to help determine whether or not a fee schedule change will suit your needs. Feel free to contact our team at 877-742-1270 or send us a message through the Client Portal.