What Does My IRA Say About Custodians?
Custodians are companies that hold individual’s IRA assets securely for them and abide by IRS guidelines and rules.
Custodian services typically focus solely on marketable securities and do not hold personal investments such as real estate. A custodian may also refer to themselves as an administrator or facilitator.
IRA stands for Individual Retirement Account
IRA custodians are financial institutions that manage an individual’s retirement account to ensure it complies with IRS regulations, while also purchasing and selling investments, sending statements, managing assets, and managing the IRA itself. Banks are popular IRA custodians because they provide FDIC-insured investments such as certificates of deposits and money market mutual funds – but banks tend to limit investment options and charge higher fees than other brokerage firms; alternative investments like private notes or real estate must find another IRA custodian that accommodates them.
Some IRA custodians can be very opaque when it comes to how they charge fees, leaving IRA holders confused about exactly how much they owe and why. Furthermore, they may fail to remind IRA holders they only have 60 days from when a distribution was taken from one IRA/Roth IRA back into another one, potentially incurring penalties as individuals are unaware they need to act quickly enough.
The I in IRA stands for Individual
For those investing in traditional IRA investments (stocks, bonds and mutual funds), selecting an IRA custodian may not be of extreme significance; however, for those considering alternative investments like real estate or precious metals such as gold bullion coins or futures contracts it could make all the difference in success or failure.
By choosing New Direction Trust Company as your self-directed custodian, you gain the power to select investments outside the typical menu for your tax-sheltered retirement and health savings account. While self-directed IRAs allow investing in various assets, the IRS imposes strict guidelines regarding which ones they allow.
Good custodians provide clear details regarding fees – both the amount and frequency. In addition, they should ensure you are not mixing personal assets with those held within an IRA (as this could create prohibited transactions), and follow rules regarding avoiding disqualified parties. In addition, you should receive tools to monitor cash flow of investments.
The I in IRA stands for Investments
Custodians of self-directed IRA accounts offer access to various asset classes, but cannot provide investment advice or sell investments; rather they act as middlemen between buyers and sellers of those assets. Selecting an ideal custodian for an SDIRA is key for its success.
Reputable custodians will always be transparent about fees. They should outline exactly what charges will incur and when. Fees can quickly consume retirement savings; so it is essential that you understand exactly how much is being charged before signing an agreement.
Custodians should also be chosen based on their ability to support your specific investment of choice. Some specialize in specific assets like private investments, precious metals or real estate while others focus more specifically on an investing strategy such as an IRA LLC. It’s essential that you conduct thorough research before selecting a custodian for your self-directed IRA as the wrong custodian could derail your entire financial plan.
The I in IRA stands for Fees
When evaluating custodians, it’s essential to understand their service fees. Key considerations may include annual account maintenance fees, load charges in mutual funds and trade commissions – and some even charge administrative fees specific to IRA accounts.
Search for a self-directed IRA custodian who allows you to invest in nontraditional assets such as real estate or private investments – rather than being limited by only investing in large, publicly traded securities.
Locate a custodian who provides open channels of communication – either online or over the phone – so they can promptly address your inquiries. Custodians who don’t answer in a timely fashion should raise a red flag.
Be certain that your custodian understands IRA regulations and specific to 60-day rollovers. Many clients have reported being charged unnecessary taxes by previous custodians because their staff did not understand these policies surrounding IRA rollovers.