Retirement Investment

Self Directed IRA Custodian Overview: What are the Rules? How Can You Choose an Account and Custodian?

Are you interested in individual retirement account investments that will allow you to put money in real estate, Bitcoins, private placement securities, and so forth? Whatever your goals are, it helps to have a self-directed IRA custodian. This custodian, which may be a trusted company or bank, needs to be approved by the IRS. There is often fraud associated with alternative investments, so even if you’re an experienced investor, you should still be very careful with your choice of custodian.

Do you have a financial advisor or portfolio manager? We recommend that you consult with them to help you obtain a good, respectable custodian.

What are some of the “alternative investments” a self-directed IRA custodian can help you make? A traditional or Roth IRA account will allow you to invest in conventional things like mutual funds and CDs. You can use a self-directed IRA in other types of investments such as:

  • Real estate
  • Agricultural land/livestock
  • Undeveloped land
  • Crypto-currency
  • Precious metals
  • Tax lien certificates
  • Oil and gas/mineral rights
  • Water rights
  • LLC membership interest

There are a few disadvantages of self-directed accounts. For instance, you might not be able to invest in life insurance, collectibles, or real estate you live in. You, nor any other “disqualified person,” will be allowed to use the property.

Self Directed IRA Custodian for Special Investments

For those things, you’ll need some other types of accounts. Also, depending on the technology and service provider, the maintenance fees may be high. Tax reporting and record-keeping requirements can be complicated, which is why you need to make sure and choose the right self-directed IRA custodian.

Essential things you’ll need include an IRA structure that is compliant with IRS rules, a bank account, and a trust or LLC. Choose an online platform that offers all three and access to their partners so that you can work with a custodian. With the right company and custodian, you won’t have to do all of the work yourself with a self-directed account.

How much work a custodian will do for you depends on your needs. Just make sure they will help you custody all cash into a secure, FDIC-insured account.

Where can you find a self-directed IRA custodian? The smartest option is to go through a service like Rocket Dollar. The maintenance fees are relatively low, and the organization partners with FDIC-backed banks for custodianship. If you want a non-bank custodian, Rocket Dollar works with its custodian partners with a trust charter and custody solutions.

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