How Do IRA Custodians Make Money?

How do IRA custodians make money

Custodians are financial institutions that hold assets belonging to an Individual Retirement Account (IRA), Roth IRA, SEP IRA or SIMPLE IRA. Most IRA custodians specialize in traditional investments like stocks and mutual funds while others may specialize in alternative assets like real estate mortgages, tax liens, livestock or physical gold and silver investments.


Custodial fees can eat into your retirement savings, particularly as you move toward alternative investments. Common examples of such fees are Fed Funds wires, document storage fees, notarizing documents, account setup charges and transfer fees – though these might not seem significant initially, they can soon add up over time.

No matter your experience level or understanding level of investing, finding an exceptional custodian can make all the difference to your investment experience. Selecting one that can meet all of your specific needs is crucial in order to avoid common errors and grow your retirement fund successfully.

IRA custodians generate revenue through custodial services as well as management and advisory fees that they charge when you use your IRA to purchase stocks, bonds or mutual funds. Some custodians also charge extra fees if transactions involve disqualified parties such as your parents, spouse or children.


Many IRA custodians charge fees to maintain and administer your account, with some charging a flat fee while others based on the value of your portfolio. Furthermore, certain custodians also assess a transaction fee when you buy or sell assets; it is therefore crucial that you find one with reasonable fees that you understand.

Self-directed IRA custodians often specialize in alternative investments like real estate, tax liens, livestock, physical gold and silver bars, private mortgages or privately held company stock; in contrast to brokerages which tend to focus exclusively on traditional securities like stocks, bonds, mutual funds etc.

Investors should research which investments their potential custodian specializes in to make an informed decision. Furthermore, investors should carefully examine annual account maintenance fees, load fees for mutual funds and commission charges charged for trades – these can all be deal breakers for some investors so it is essential that you fully comprehend them prior to selecting your custodian.

Investment options

IRA custodians typically make their living by providing various investment options and charging transaction or flat fees per asset purchased, or they might offer automated services that streamline repetitive or scheduled transactions.

When selecting a self-directed IRA custodian, choose one with an extensive array of investment options in order to diversify your retirement savings portfolio. Furthermore, look for an organization with an excellent online user interface and knowledgeable specialists available 24/7 who can answer your queries about self-directed retirement accounts.

Self-directed IRA custodians may include banks, trust companies and other entities approved by the IRS. They can handle alternative assets, including real estate, private equity, cryptocurrencies and precious metals – without providing investment advice – though fees for their services (e.g. Fed Funds wires, notarizing documents and document storage fees) should always be clearly laid out – they may add up quickly!

Customer service

A reliable IRA custodian should offer superior customer service. This should include responsiveness, accuracy and prompt responses. In addition, they must possess knowledge about regulations surrounding self-directed IRAs – helping clients avoid prohibited transactions while finding tax-efficient investments.

When an IRA investor purchases real estate with their IRA, their custodian must handle an extensive amount of paperwork relating to deeds, title insurance policies, wires, closing dates, rent payments and eviction notices – which require substantial amounts of manual work in order to manage.

The best IRA custodians provide transparent pricing and fees that are easy to understand. Some providers charge annual account maintenance fees while others levy commissions on trades – fees like these can quickly accumulate, so selecting an IRA custodian with low maintenance fees and no load or transaction fees could save money over time.

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