Federal law requires you to have a custodian for every IRA… but are custodians really vital for self-directed IRA’s, or just a necessary evil? For better or worse, your choice of custodian is one of the most vital choices you’ll make as a self-directed IRA investor. Below you’ll find answers to the most important questions about self-directed IRA custodians, and you can download a free copy of our Comprehensive List of Self-Directed IRA Custodians and Administrators:
What is a Self-Directed IRA Custodian?
When Congress created the IRA back in 1974, they decided that you and I weren't sufficiently competent to handle these accounts on our own. (Yes, I know it's a harsh viewpoint… but it's still true!)
So they decided that if you want to have an IRA, you'd need to go to a special type of financial company to set it up.
This type of company is called a “custodian”. Custodians meet specific requirements established by the IRS.
To understand what a self-directed IRA custodian does, the easiest comparison is a stock brokerage like eTrade or Charles Schwab.
What do stock brokers – and IRA custodians – do?
- They execute transactions on behalf of their clients
- They keep some financial and accounting records for the account
- They report to the IRS about how the account holder is using the account.
Your self-directed IRA custodian does exactly the same things… but it's sometime a bit more complicated.
For example, consider a real estate investment. Somebody – that's you – will have to find a great deal and get a contract for the purchase of that property. But you can't sign the contract yourself. You've got to forward it on to the custodian for their signature, because…
…the assets in your IRA are technically owned by your custodian, for your benefit. So everything must have the custodian's name on it, not yours.
Similarly, real estate in your IRA will need to do things like get hazard insurance and pay property taxes. It's your IRA custodian who will – at your direction – handle these tasks.
Picking the right self-directed IRA custodian is one of the most important choices you'll make. Please study the information I'm providing to you so you get it right the first time.
Why Do Some Self-Directed IRA Providers Call Themselves “Administrators” Rather than “Custodians”?
If you have an IRA of any type, you’ve got to have a custodian… the law requires it.
But some custodians don’t deal with the public directly. Instead, they just do the work of holding IRA accounts, but they don’t do any marketing or customer service themselves.
So if some custodians do no marketing, how do they find clients like you and me?
They partner with IRA administrators. IRA administrators are usually independent companies that serve as the marketing and customer service departments of custodians.
So while you’re evaluating IRA custodians, you’ll likely end up evaluating several IRA administrators, too, because sometimes the difference isn’t entirely obvious.
It really doesn't matter very much, ultimately.
At the end of the day, you will use an IRA custodian one way or the other. The law requires it…
…The only question is whether that custodian does their own marketing and customer service, or whether there’s an Administrator on the front end that handles that for them.
But remember this: If you do use an IRA administrator instead of using a custodian directly, you still must evaluate the financial health of the custodian that serves that administrator, because it’s the custodian who actually holds your money and assets.
Comprehensive Listing of Self-Directed IRA Companies
|Accuplan Benefits Services||406 S Jordan Pkwy #640||South Jordan||UT||84095||(801) 266-9900|
|3525 Piedmont Rd NE|
Building 8, #101
|American Estate & Trust||6900 Westcliff Dr|
|Las Vegas||NV||89145||(702) 489-6403|
|American IRA||137 Broad Street||Asheville||NC||28801||(828) 257-4949|
|American Pension Services (In Receivership)||N/A||N/A||N/A||N/A||N/A|
|Bank of Utah||2605 Washington Blvd||Ogden||UT||84401||(801) 409-5000|
|CAMA Plan||122 East Butler Ave|
|Central Bank of Utah||75 North University Avenue||Provo||UT||84601||(801) 655-2126|
|Community National Bank||225 Main St||Seneca||KS||66538||(785) 336-6111|
|Entrust Group||555 12th Street|
|Equity Trust Company||1 Equity Way||Westlake||OH||44145||(440) 323-5491|
|First Midwest Bank||1 East Erie Street||Chicago||IL||60611||(312) 440-3022|
|Goldstar Trust Company||1401 4th Ave||Canyon||TX||79015||(806) 354-3540|
|Horizon Trust||P.O. Box 30007||Albuquerque||NM||87190||(888) 205-6036|
|IRA Express||74 N Main St||Cedar City||UT||84720||(435) 867-8008|
|IRA Financial Group||1688 Meridian Ave #504||Miami Beach||FL||33139||(305) 538-9292|
|IRA Financial Trust Company||221 S. Phillips Ave.|
|Sioux Falls||SD||57104||(800) 472-1043|
|IRA Innovations||100 Concourse Pkwy|
|IRA Resources||825 La Jolla Blvd||La Jolla||CA||92037||(858) 459-1212|
|IRA Services Trust||1160 Industrial Rd|
|San Carlos||CA||94070||(800) 248-8447|
|Kingdom Trust Company||1105 KY-121 b||Murray||KY||42071||(270) 226-1000|
|Liberty Trust Company||101 S. Reid Street|
|Sioux Falls||SD||57103||(800) 473-1977|
|Madison Trust Company||401 E 8th St|
|Sioux Falls||SD||57103||(800) 721-4900|
|Mainstar Trust Company||214 W 9th St||Onaga||KS||66521||(785) 889-4213|
|MidAtlantic IRA||125 South Carroll Street|
|Midland IRA||1520 Royal Palm Sq. Blvd|
|Fort Myers||FL||33919||(239) 333-1032|
|Millennium Trust Company||2001 Spring Rd|
|Oak Brook||IL||60523||(630) 368-5600|
|Mountain West IRA||10096 W Fairview Ave|
|Nevada Trust Company||9130 W Russell Rd|
|Las Vegas||NV||89148||(702) 696-0000|
|New Direction IRA||1070 W Century Dr|
|Next Generation Trust Company||75 Livingston Avenue|
|NuView IRA||280 S Ronald Reagan Blvd|
|Polycomp Administrative Services||3000 Lava Ridge Court|
|Preferred Trust Company||2471 W Horizon Ridge Pkwy|
|Premier Trust||4465 S. Jones Blvd||Las Vegas||NV||89103||(702) 507-0750|
|Provident Trust Group||8880 W Sunset Rd|
|Las Vegas||NV||89148||(888) 855-9856|
|Quest IRA||17171 Park Row Dr|
|Real Trust IRA Alternatives||312 East Trow Avenue|
|PO Box 23149||Waco||TX||76702||(512) 637-5739|
|Sovereign International Pension||1314 Alt 19||Palm Harbor||FL||34683||(727) 286-6237|
|Specialized IRA Services||6100 Indian School Rd NE|
|STC Inc. (Security Trust Company)||223 N Prospect St||Hagerstown||MD||21740||(301) 665-2830|
|Summit Trust (In Receivership)||8861 West Sahara Ave|
|Las Vegas||NV||89117||(877) 268-9115|
|Sunwest Trust||10600 Menaul Blvd NE||Albuquerque||NM||87112||(505) 237-2225|
|uDirect IRA||8 Corporate Park|
|Vantage IRA||20860 N Tatum Blvd|
Which Kind of Self-Directed IRA Provider Should I Use: Custodian or Administrator?
My friends who run IRA custodial companies won't like my saying so, but the truth is: It doesn't matter whether you use a custodian or an administrator.
Some custodians try to make the argument that it's better for you to go “direct” to the custodian, but so far, I've never seen any evidence that it makes any difference.
You should choose the IRA company – whether custodian or administrator – that you feel meets your needs.
Which Custodian or Administrator Is Best For Setting Up Self-Directed IRA's?
This is actually a pretty complicated issue, but I’ll make it simple for you.
To choose the best custodian for you, I believe you should consider these things:
- Type of Assets You’ll Purchase: If you only want to buy stocks and mutual funds, then go with a custodian like eTrade or Charles Schwab who specializes in those. But if you want to invest in real estate or other non-Wall Street assets, you’ll need a truly self-directed IRA custodian.
- Customer Service Standards: How quickly will your custodian fund your investments? Will you have a dedicated account representative? Does your custodian have experience in the specific type of asset you’d like to purchase?
- Fees: Most IRA custodians charge an annual fee plus a flat fee for specific services or they charge on the basis of the size of your account. Usually, flat fee arrangements are less expensive.
- Financial Stability: Is your custodian financially strong? While it is very rare, sometimes custodians go out of business and cause huge problems. Note that merely having a large number of accounts or a lot of assets under management is not the same as being financially strong.
For your convenience, there's a listing on the page you're now viewing of every self-directed IRA custodian and/or administrator known to us at this time.
Will My Custodian (or Administrator) Find Investments For Me?
No. In fact, providing investment opportunities is expressly against the policy of every self-directed IRA custodian I’ve ever encountered.
Providing third-party investment advice is an entirely different business and requires entirely different licensing than is required to be an IRA custodian or IRA administrator.
Remember: Self-Directed IRA’s are self-directed, not custodian-directed, and that’s to your benefit. You get to – and must – call the shots yourself.
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About The Author
Bryan Ellis is host of Self Directed Investor Talk, America's #1 podcast and for affluent self-directed investors. He's also an expert in self-directed IRA's, solo 401k's and 1031 exchanges. You can find Bryan's writing in very highly respected publications including Forbes, Entrepreneur and TheStreet. Bryan lives in metro Atlanta, Georgia with Carole Ellis - his wife, business partner and best friend - and his 4 children ranging in age from 2 to 19.