Self-Directed IRA Administrators vs. Custodians
More and more people are coming to understand the power behind Self-Directed IRA strategies. Further, they are embracing the wisdom of diverse and unconventional asset classes while liberating their retirement portfolios from the narrow outlooks frequently characterizing the big Wall Street investment firms.
As such, with that knowledge comes the increased openings of Self-Directed IRA accounts. Many of these new investors are not yet clear on the role of custodians and third-party administrators in the Self-Directed IRA industry – and the important distinctions between the two.
Let’s take a closer look.
IRA rules prohibit investors from taking personal, direct possession of assets within their Self-Directed IRAs. Yes, you can own the house down the block within your Self-Directed IRA, but you cannot personally reside there. What is more, you cannot keep the gold coins your IRA owns in a safe in your living room. To use a more traditional example, it is no different than not being able to personally hold your stock certificates residing in a Schwab IRA account.
Custodians hold your Self-Directed IRA assets on your behalf. Administrators process the paperwork on behalf of the custodian. American IRA is an administrator and New Vision Trust Company, a South Dakota chartered Trust Company, holds the assets. New Vision Trust Company and American IRA, LLC are an integrated financial company providing both custodial and administrative oversight for your Self-Directed IRA transactions.
A custodian handles transactions and holds Self-Directed IRAs and other retirement assets on your IRA’s behalf. The IRS has stringent requirements for Self-Directed IRA custodians. These businesses are subject to regular inspections and audits by federal regulators. They can hold titles, cash, investments and other types of property on investors’ IRAs’ behalf, and handle a lot of transactions.
If you own gold or other precious metals, or physical assets within an Self-Directed IRA, chances are there will be a custodian in the mix, holding the gold or other assets in a secure, insured facility somewhere – or at least physically holding certificates.
An IRA third party administrator, such as American IRA, LLC, has a more tapered scope of engagement. Administrators are the account record-keepers responsible for generating statements and documents. We do not hold assets directly, but work with New Vision Trust Company, a South Dakota chartered Trust Company on your behalf. New Vision Trust Company and American IRA, LLC are an integrated financial company providing custodial and administrative oversight for your IRA transactions. We simplify the process, document your transactions, generate statements and 1099s, and work with your advisors to help you stay in compliance with IRS rules and regulations.
We do not advise on the suitability or non-suitability of any particular investment for your individual portfolio. That is up to you and your own financial advisors. We focus on quickly and accurately executing and recording the transaction on your behalf, in accordance with IRS regulations.
Moving down the Self-Directed IRA industry hierarchy, there are other professionals and salespeople known in the industry as “promoters” and “facilitators.”
These individuals do not handle transactions and do not hold assets on your behalf, but they support the Self-Directed IRA process in other ways.
One type of promoter might be a real estate agent who focuses on helping investors find properties for their Real Estate IRAs, and who becomes very knowledgeable in that niche. Others are financial advisors, RIAs, IARs, accountants and attorneys who also promote the Self-Directed IRA approach and help facilitate your Self-Directed IRA strategy.
For example, an attorney may help create entities within your Self-Directed IRA such as C corporations and LLCs which may help insulate other properties and IRA assets against the claims of creditors.
Every Self-Directed IRA investor needs a custodian or administrator affiliated with one or more custodians to create and maintain a functional Self-Directed IRA account. Few are totally go-it-alone beyond that. Most investors require a knowledgeable and experienced, multi-disciplinary team of professionals to get the most out of their self-directed retirement accounts.
Fortunately, getting started in Self-Directed IRA investing is very easy, and our team of professionals at American IRA, LLC is available to help you throughout the process.
To learn more about our services as one of the leading Self-Directed IRA administrators in the country, or to set up an account and get started investing, call us today at 866-7500-IRA (472), or visit us at www.AmericanIRA.com.
You can also read more on this subject at our blog, here.
Do not delay! Give us a call today! We look forward to working with you!