Eight years ago, a technology entrepreneur was fed up with his individual retirement account options.

 

“I had this desire to invest my retirement savings in a private company I was involved with,” said Eric Satz. “It was a complicated, convoluted process that took way too much time, and I did all the work. At the end of the process I wrote a check to the custodian [and] they wanted to charge me a minimum fee, and then an increasing fee based on the performance of my asset, which they had nothing to do with.”

 

After trying out the process with two more custodians, Satz set out on his own to integrate alternative assets into the roughly $30 trillion held in U.S. retirement accounts. In 2018 he created Alto Solutions Inc., a Nashville-based custodian whose Alto IRA digital platform enables investors to add alternative assets to their IRAs. It currently custodies nearly $500 million in assets.

 

Alto offers two self-directed IRA products, the Alto Alternative IRA and the Alto CryptoIRA, which are available as traditional qualified, Roth and SEP accounts. Between the two accounts, any type of asset can be held in an IRA, including pre-IPO companies, private fund offerings, real estate, venture capital, private equity, cryptocurrencies, art and other collectibles.

 

Tara Fung, Alto’s chief revenue officer, said Alto decided to bifurcate its alternative and cryptocurrency IRAs out of an abundance of caution at a time when regulators were just starting to look at whether tokens like Bitcoin should be held in retirement accounts.

 

“There was certainly a period of time when we didn’t know what the DOL, SEC or IRS would do, and to some extent, I still don’t think we know,” said Satz, Alto’s CEO. “But we’re past the point where Bitcoin at least is going to be here to stay for a long time. We were concerned because if you have a bad asset in an IRA account, you taint the whole account.”

 

The company also handles the entire process of transferring assets in an IRA or other retirement account from an outbound custodian into an Alto IRA.

 

Satz said Alto is expanding its tool set to help users value their investments and calculate required minimum distributions.

 

“Users have the option of looking at a consolidated picture of their retirement accounts; the RMD doesn’t have to come out on a pro-rata basis,” Satz said. “They also have the option of distributing a percentage of an illiquid asset to another person, which fulfills the distribution requirement without the need to liquidate that asset.”

 

Alto does not yet support inherited IRAs.

 

Fee Structure

A starter alternative IRA on the Alto platform costs $10 per month or $100 per year and offers access to Alto’s investment partners with a $10 to $50 investment fee each time Alto executes an investment on the account holder’s behalf. An upgrade to a “Pro” IRA costs $25 per month or $250 per year, with a $75 per-investment fee to access non-partner investment firms.

 

“One of the things plaguing the alternatives and IRA industries is the lack of transparency around fees,” Fung said. “A flat fee is the key to enabling more transparency.”

 

Alto’s cryptocurrency IRA carries a 1% annual account fee, or 0.083% per month, with a $2 monthly minimum based on the user’s average CryptoRIA balance. The account also has a 1.5% trade fee for all transactions under $250,000. Additional flat fees are charged for account closure ($50) and outbound wire transfers ($25) from each account.

 

Alto's purpose, Satz said, is to reduce the time and complexity that often comes with investing in alternative assets.

 

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