Every individual retirement account (IRA) needs a custodian who is accountable for keeping records and following IRS rules.
Reputable custodians offer expert assistance. Custodians may include banks, credit unions, savings and loan associations, brokerage firms or any entity approved by the IRS as custodians.
Banks
An Individual Retirement Account (IRA) is a tax-deferred savings plan with investment benefits that anyone, such as individuals, small-business owners and self-employed workers can open. They may take various forms – traditional IRAs, Roth IRAs, Simplified Employee Pension Plans (SEP) IRAs and Savings Incentive Match Plan for Employees (SIMPLE IRAs).
Every Individual Retirement Account (IRA) needs an IRA custodian – an entity which holds title to assets/investments within it – as trustee. Common examples are banks, credit unions, savings and loan associations or trust companies approved by the IRS to take this role.
Investors looking for the ideal IRA custodian should take into account various factors, including security protocols, fees, customer testimonials and system functionality. Madison Trust boasts over $4 billion in custodial assets and 15,000 clients and provides functionality to facilitate investments across alternative asset classes like real estate, precious metals, private equity investments, startups promissory notes and tax liens.
Mutual Fund Companies
Though banks and brokerage firms tend to serve as custodians of individual retirement accounts (IRA), mutual fund companies can also act as custodians of your account. Mutual fund custodians facilitate transactions at the direction of an IRA owner and collect fees or commissions in return. They can assist you with investing in traditional assets like CDs, stocks, bonds, ETFs and mutual funds; however they will not offer non-traditional investments like real estate and private investments.
Before selecting an IRA custodian, it is crucial to evaluate their fees structures carefully. Fees could include annual maintenance fees, loads for mutual funds and commissions for making trades; lower fees are preferred. Furthermore, make sure that they offer no-load mutual funds as this could save time and money in transaction fees. When searching for Self Directed IRA custodians look for one with “checkbook control”, which allows the account holders to write checks directly from their SDIRA LLC account in order to invest without needing permission of an intermediary custodian saving time and money on transaction fees.
Insurance Companies
Insurance companies may serve as custodians of your IRA, though they often do not allow alternative investments due to only offering custodial services for marketable securities and not having the infrastructure required for managing non-standardized paper contracts – something typically required for private investments.
Although many custodians are reliable and reputable, it is wise to do your research. Pay particular attention to customer testimonials, security protocols and fees charged. Annual account maintenance fees, load charges in mutual funds and trade commissions should all be carefully considered when choosing your custodian.
Make sure that you thoroughly review your self-directed IRA account statements, particularly prices and asset values, to verify their accuracy. With alternative investments being inherently more difficult to value, doing your due diligence is of utmost importance.
Brokerage Firms
Brokerage firms are ideal custodians of an Individual Retirement Account (IRA), providing access to marketable securities such as stocks and bonds as well as mutual funds.
Investors looking to self-direct their IRAs can work with a self-directed IRA custodian that allows them to invest in private investments such as real estate, privately held businesses or precious metals. Typically they charge an inexpensive setup fee and light administrative fees as well as transaction fees when trading takes place.
IRS has provided a list of approved nonbank custodians and trustees that are approved to manage self-directed IRAs. When selecting an IRA custodian, three key factors should be taken into consideration: investment options, fees and customer service. When selecting a custodian it’s important to consider investment options, fees and customer service when making your choice; affiliation with investment companies could limit investments or not provide personalized customer service suited for self-directed IRAs; additionally administrators often blur the distinction between custodian and administrator and don’t conduct safety and soundness examinations on site – three key aspects worth considering when selecting your chosen custodian!
