How much does it cost to setup a self-manager super fund?
This is one of the first questions that someone will ask once they have decided that an SMSF may be the best option for their retirement savings.
The cost of setting up an SMSF will differ depending on your needs as well as the type of company you use to establish your fund.
Setup costs can vary from $1,000 or more than $10,000. Although a super cheap $1000 SMSF setup can seem very attractive, it is important to also consider the upgrade costs or any lock-in period which may apply. If you wish to purchase investment property or borrow within the fund then starting with the right fund structure is essential.
Online SMSF Provider Costs
Online SMSF administration providers have grown hugely in popularity over the last few years.
The services offered by the online providers generally include the initial setup as well as ongoing audit and compliance management.
Another very popular low cost provider is esuperfund, who also offer $799 setup but with a slightly higher ongoing fee of $799 per year. This doesn’t include admin for property investments which cost an extra $420 per property per year.
When comparing the fees of each provider it is important to remember that not all providers are the same. Some may charge higher fees, but they may also offer more services and features.
It is important to choose the provider that is right for your needs, rather than choosing purely on price.
Accountant Setup Costs
Some SMSF trustees elect to have their fund established by their accountant. This has traditionally been the way that most SMSFs are setup.
Most accountants don’t have their SMSF fees publicly available, which makes it difficult to perform a comparison. Our research a simple fund (without a Corporate Trustee) will cost you between $2,200-$3900. I generally not recommended to set up a SMSF without a Corporate Trustee. Full SMSF Trust with Corporate Trustee setup with an accountant will general set y0u back $4000-$6000. If you have a complex structure with family trusts or a large asset base this could run to $10,000-$20,000.
Anecdotal evidence suggests that accountants do charge higher fees than the online SMSF providers, but one needs to keep in mind that an accountant can also offer expert advice where an online service provider cannot.
Although the cost of setting up and maintaining your SMSF is an important factor, it shouldn’t be the sole reason for switching to a self-managed superannuation fund.
There are many other considerations to make on whether or not an SMSF is right for you. If you are unsure you should speak with your financial adviser or financial planner who will be able to assess your needs and make recommendations.