Choosing a Self-Directed IRA Custodian: What You Need to Know
Whether you have an employer-directed IRA or Self-Directed IRA, your account needs a Custodian. If you have ever held an IRA through your employer, you likely did not have to choose a Custodian, as the account was set up for you. Now that you’ve decided to open a Self-Directed IRA, you’ll need to choose the Custodian that’s best for your financial needs. So how do you choose a self-directed IRA Custodian? Let’s take a look at a few key points you should keep in mind as you save for your retirement.
A Good Self-Directed IRA Custodian Will Offer Variety
When you hold an employer-directed IRA, you may be limited in the options you can hold. Because you’ve chosen a Self-Directed IRA, more options are open to you.
A good Custodian will offer you the opportunity to invest in a broad range of options, including stocks, bonds, ETFs, mutual funds, real estate and even restaurant franchises. The Custodian will know which types of investments are and are not legally eligible for your IRA and will help you build a diverse portfolio based on your financial goals.
A Good Self-Directed IRA Custodian Will Offer Low Fees
When you begin to research Self-Directed IRA Custodians, you will notice that all charge fees. They are in business to make money, after all, so this is to be expected.
Custodians’ fees, however, may vary widely from one entity to another. Fees may include commissions, maintenance fees, load fees and more. Shop around as you search for a self-directed IRA Custodian – not all fee structures are created equally. Choose a Custodian with a fee structure that matches your budget and your investment strategy.
A Good Self-Directed IRA Custodian will Offer Customer Service and Comfort
This may go without saying, but your Self-Directed IRA Custodian should be one you feel comfortable with. Your retirement income is your livelihood; you want to ensure that your portfolio is protected.
Take your time in shopping around for an IRA Custodian. If you feel that one particular entity lacks experience, or you just have an uneasy feeling about investing under their guidance, you have every right to continue your search.
Ask for recommendations from family members or even from professionals at your financial institution. Check with the IRS to ensure that the Custodian is licensed. Interact with the institution’s customer service – ask questions and gauge whether you feel you’re comfortable with the personalized service the Custodian provides.
Consider Your Custodian’s Experience and Expertise
With more and more Americans becoming self-employed, there are an increasing number of Custodians offering services to those seeking a Self-Directed IRA. You will certainly want to “vet” your Custodian and ensure that they are licensed with the IRS. It’s also important, however, to make note of the Custodian’s experience and, if applicable, expertise.
If you have a general idea of the type of investments you would like to make, it’s a good idea to research your options and find a Custodian with years of experience with that specific type. On the same front, if you desire a portfolio that’s more diverse, seek out a Custodian that doesn’t specialize in a niche market.