An IRA custodian is a financial institution authorized by the IRS to provide custody services and hold assets on behalf of IRA owners, including gold and silver. According to IRS rules, an IRA must have a custodian, who can be a bank, a mutual fund company, or a brokerage firm. The IRS requires that your IRA have a custodian to handle investments such as IRA Gold and Silver. It is the depositary's responsibility to execute investment decisions made by the owner of the IRA and to ensure that all investment requests and account activities are carried out in accordance with regulatory requirements established by the IRA. Technically, any IRA in which you make all investment decisions is “self-directed.”.
However, in the financial services industry, a self-directed IRA usually means an IRA in which the custodian allows him to invest outside the more traditional world of stocks, bonds, mutual funds and exchange-traded funds (ETFs). Unless you're comfortable with a robo-advisor, it's very important to have expert specialists answer your questions online or by phone. Nothing is more frustrating (especially if you manage a self-directed IRA) than receiving incomplete or confusing answers to your questions. When opening an IRA, it's important to ask yourself several questions before choosing a custodian.
Do you prefer a traditional or Roth account? Or both? Do you like investing in CDs, mutual funds, stocks and bonds, or do you crave the most adventurous options available with a self-directed IRA?. An Individual Retirement Account (IRA) offers investors certain tax benefits for retirement savings. Some common examples of IRAs are the traditional IRA, the Roth IRA, the simplified employee IRA (SEP) and the employee savings incentive compensation plan IRA (SIMPLE). All IRAs are run by custodians for investors.
Custodians may include banks, trust companies, or any other entity approved by the Internal Revenue Service (IRS) to act as custodians of an IRA. Most IRA custodians limit IRA account holders to stocks, bonds, mutual funds, and certificates of deposit approved by the company. It's also important that you understand what you should know, search for and ask any potential self-directed IRA provider before investing. The SEC's Investor Education and Promotion Office issues this investor alert to warn investors about the risks associated with self-managed individual retirement accounts (self-directed IRAs).
Both managers and facilitators can act as intermediaries between the owner of the IRA account and the custodial partner who owns the assets. A diversified investment portfolio with the right selection of stocks, bonds, mutual funds and individual ETFs can help reduce risk in an IRA or any account. As more self-directed IRA providers emerge on the market, it's more important to research potential providers to ensure that you have the utmost confidence in managing your account. Your financial future is in the hands of the custodian; you should be careful if you have limited experience.
Since these platforms do not involve human interaction, fees and other expenses that usually reduce the return on investments in IRA accounts are usually non-existent. However, in general, banks don't score particularly high in IRAs because most don't offer many investment options other than the above-mentioned vehicles. The predecessor firm of Equity Trust Company was established in 1974 and the IRS approved its custody in 1983. Because alternative investments are more cumbersome for custodians than custody, managers and facilitators have become a link between the IRA account holder and the depositary. .
For additional information on IRAs, see the Internal Revenue Service's Online IRA Resource Guide. Despite the risks posed by self-directed IRAs, investors can take a number of steps to reduce the risk of fraud. It's important to note that the IRS only authorizes custodians to hold (or “guard”) the assets in their IRA account. .