Tips For Selecting a Self-Directed IRA Custodian

Tips for Selecting a Self-Directed IRA Custodian


Written by John Rothans

Jul 31, 2020

To hold physical gold and silver in a Precious Metals IRA, you are required by the IRS to open an account with an approved custodian and have the custodian purchase precious metals on your behalf. But there are so many custodians to choose from. And what’s all this you hear about promoters and administrators? Learn how to evaluate IRA custodians and pick the one that’s right for you.

What Is an IRA Custodian?

Every IRA, regardless of what type it is, must have a custodian. This includes a Self-Directed IRA. A custodian can be a bank, credit union or trust company, or an entity that’s licensed and regulated by the IRS as a “non-bank custodian,” notes Equity Trust.

IRA custodians must follow IRS requirements to hold assets belonging to their clients; those requirements govern obligations like writing checks and undertaking wire transfers. Custodians face scrutiny by financial regulators.

Why Are Custodians Required for Self-Directed IRAs?

Custodians, also known as trustees, are critical to any IRA maintaining its tax-deferred or tax-free status.

A Self-Directed IRA is an IRA held by a custodian and allows the account holder to diversify with a broad set of assets. Custodians for self-directed IRAs may enable the purchase of “alternative assets” such as precious metals, real estate, promissory notes, tax lien certificates, and private placement securities.

U.S. Money Reserve is not a custodian. Rather, we are a provider of precious metals. An IRS-approved custodian can purchase gold and silver from a provider of precious metals on behalf of the IRA owner. Then those precious metals are held in an IRS-approved depository for secure storage.

A Self-Directed IRA containing precious metals is called a Self-Directed Precious Metals IRA or Gold IRA. Equity Trust Company and Preferred Trust Company are two of U.S. Money Reserve’s preferred custodians for Self-Directed Precious Metals IRAs. However, there are many other trusted institutions you can choose from depending on your personal preferences and situation. While the final decision is up to you, know that many of our clients have been served well by Equity Trust Company and Preferred Trust Company.

How Do Custodians Differ From Administrators and Promoters?

You may hear about a few other players if you’re looking into Self-Directed IRAs for the first time, and those players are administrators and promotors. Their roles can sometimes be confused with those of an IRA custodian.

Self-Directed IRA administrators and promoters are limited in the services they can provide. They don’t meet IRS requirements to be a custodian or trust, and they can’t hold assets or issue funds.

Administrators and promoters are responsible only for marketing and selling, entering data, producing statements, and supplying basic reports. To complete transactions, a Self-Directed IRA administrator or promoter must partner with a Self-Directed IRA custodian or trust that’s permitted to hold IRA funds and assets.

To complete transactions, an administrator or promoter must transfer funds to and from a custodian. But since Self-Directed IRA administrators and promoters are subject to little oversight, these transactions can be risky.

How Do You Pick a Self-Directed IRA Custodian?

Put some thought into the following three factors when selecting a custodian for your Self-Directed Precious Metals IRA:

  1. Experience. Check out the custodian’s experience. How long has it been in business? What is the company’s track record? Be cautious if the custodian lacks in-depth expertise. You’re putting a considerable part of your financial future in the hands of a custodian.
  2. Knowledge. Self-Directed IRA custodians do not offer financial advice. However, all employees of a custodian should be well-versed in information about Self-Directed IRAs, and the custodian should be able to supply easy-to-understand, well-researched materials about these IRAs.
  3. Customer service. Just like any business you deal with, a Self-Directed IRA custodian should provide topnotch customer service. Everyone you come in contact with should be professional, friendly, knowledgeable, and efficient. In the end, the custodian should deliver superb value.

When you work through U.S. Money Reserve’s Precious Metals IRA program, your IRA Account Executive will help take care of all the heavy lifting. They’ll coordinate with your custodian to set up your IRA and, if needed, facilitate the transfer of funds from your old custodian to your new custodian. Call U.S. Money Reserve today for a one-on-one consultation.


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