How to Choose a Self-Directed IRA Custodian

Alternative Investments in IRAs

Compare Custodians Template

IRA Custodians, Administrators, and Promoters

To invest in alternative assets such as real estate or private equity with your retirement savings, you need a self-directed IRA. The IRS states that this must be through a passive 3rd party. Many investors choose a custodian for the added protections this oversight brings.

However, there are many financial institutions out there that hold alternative investments in IRAs, not all of which are custodians. It's important to differentiate between these types of companies, since they're not all regulated the same (if at all). Choose the right company— one that will help you meet your retirement goals. 

Providers & Administrators

  • Usually NOT custodians. These companies rely on a custodian (a separate entity) to conduct business.
  • Not directly regulated by state and federal law, they act as a third-party administrator for your account.
  • May be backed by an outside custodian who they operate under or have a contract with.

SDIRA Promoters

  • Usually offers a product such as an LLC to hold your investment.
  • May or may not be custodians, but typically works with one.
  • Most act as a third-party investment provider, referring business to one or many custodians.

SDIRA Custodians

  • Are regulated directly by state and federal law.
  • Hold the title of the assets and investments in your IRA directly.
  • Must comply with IRS requirements, and are directly overseen and regularly audited by the regulating state.

Added Protection and Oversight

A company must apply to become a self-directed IRA custodian. They must demonstrate certain requirements and meet certain legal and IRS regulations before approval. This is a complex process. The company must meet strict standards and provide a capital pledge, insurance to cover liabilities, a fidelity bond, and other stringent qualifications. When the company and its leaders have demonstrated they are capable to perform custodian duties as outlined by the law, then it receives a Charter and Certificate of Authority from the state in which it applied.

How Are Custodians  Regulated?

Trust companies are audited regularly and held to specific guidelines based on written policies and procedures. During these reviews, auditors do a thorough examination of the books, records, funds, and IRA investments held by the company. They want to make sure that everything is being done correctly. Auditors will specifically be looking for any prohibited transactions (transactions involving disqualified persons or asset-types), as this falls afoul of IRS regulations. Our charter (and all self-directed IRA custodian charters) specifically forbids these types of investments. For example, a self-directed IRA custodian cannot legally offer one of their clients any investment advice or investment opportunities. The investment options are yours as is conducting due diligence on the assets.

Choosing the Best Self-Directed IRA Custodian

It is important to determine the type of company you want to work with, based on your investment strategy. Are you looking for a one-stop shop? If so, perhaps a large company with many types of services would be ideal. But beware, don't get stuck with a company that is a jack of all trades, master of none. Here's what to look for when choosing a Self-Directed IRA Custodian:

Fees

Overlooked fees can have a huge impact on IRA accounts. Retirement plan fees are the biggest drain on retirement funds, keeping your hard-saved money from growing like it should. Learn how custodians charge and compare to understand transaction fees and schedules. As your investments grow, you shouldn’t have to pay more.

Industry Knowledge

Clear communication is very important, especially when it comes to your retirement. If you have a time-sensitive question, you want to make sure you can get ahold of the staff— and when you do, they know what they’re talking about.

Servicing Times

Servicing times are very important. Timing can make or break an investment deal. You can end up paying late fees if your bills aren’t paid on time. You want the custodian you chose to make things easier for you, not harder.

To learn about a company’s customer service, servicing times, or communication style, pay attention to the signs. Did someone call you back in a timely manner? Did you get tossed around from one person to the next? Ask how long it takes to process your transaction. Asking these types of questions can save you major headaches when trying to get the basics handled down the line.

A Regulated Financial Institution

Our annual account reviews include but are not limited to audits of: recordkeeping, safekeeping of assets, compliance with federal and state laws, IRS reporting, trust accounting, account correspondence, completing trust account tax returns, distributing account statements.

Seasoned and Best in Class

If you are looking for specialized services and personalized service, IRAR is the ideal custodian. We specialize in real estate and private equity transactions in self-directed IRAs. We bring years of knowledge, experience, and hands-on assistance as needed. We do not offer, endorse, or promote products or investments. Your IRA, your choice. Our team holds the Certified IRA Services Professional (CISP) designation. Our average employee has 10 years of experience in self-directed IRAs, uncommon in our niche industry. We’re a seasoned and dedicated group. We have a passion for education. No matter the question, you know you’re getting up-to-date information every time you call.

IRAR’s committed to answering the phone, because we know it’s essential to have a team you can trust behind you. We’ll be waiting in the wings, to help keep your retirement fund on the right side of IRS regulations.

Give us a call— you'll be glad you did. 888-322-6534.