What You Need To Know When Choosing A Self-Directed IRA Custodian

Posted: 02 Mar 2008 | Categories: Investing

Choosing a self-directed IRA custodian is an important decision. All self-directed IRA custodians must meet certain requirements outlined by the treasury department, but that does not mean they are all they same. Here’s what you should look for.

Some considerations are common sense. No lengthy explanation is needed. You want to look for a self-directed IRA custodian that is experienced, professional, credible and financially stable. A small-town, unproven account administrator might not be around until you reach retirement age. Transferring funds into the hands of a new trustee is sometimes costly. Plus you have to start your search all over again.

Other concerns are not as obvious. You probably decided to switch to a self-directed IRA so that you would have more control over the investments that are made with your retirement funds. You may be familiar with certain types of investments and hope to use them to increase your funds faster. Only a few self-directed IRA custodians offer their clients the ability to invest in anything other than stocks, bonds and mutual funds.

Investing in things like real estate, mortgages, raw land and other often overlooked options are considered “special” or non-traditional. Those kinds of investments can be highly profitable and some are relatively low risk, but in order to make them, you have to choose the right self-directed custodian.

Using the funds in your IRA to make an investment will protect you from capital gains taxes, if the deals are completed correctly and the profits are returned to the account. Most self-directed IRA custodians are not familiar with process. If they make a mistake, you could lose money and your tax-free advantage.

Another thing to look for in a self-directed custodian is an “all-inclusive fee schedule”, one that is clearly outlined, before you sign anything. If you shop around and compare fees, you may be surprised by the types and amount of fees that are charged.

For example, some self-directed IRA custodians charge for things like purchasing, selling, and record keeping. Some account managers charge $150 per hour to do the research and let you know if an investment is allowed under IRA tax guidelines. You might think they would already know that, but that’s the problem.

Most people that act as self-directed IRA custodians are involved in many other endeavors. They are day-traders, stock brokers, bank employees, etc. IRA account management is probably not their specialty and because of that, they may “steer” you the wrong way.

You want a self-directed IRA custodian that will act under your direction, helping you to make the investments that you want to make, while insuring that you are staying within the government regulations that concern taxes and other specific IRA account considerations. You do not want to be pressured into trading an asset, given unwanted advice, nor charged additional fees for holding a position for an extended period of time.

You might want to check out Equity Trust Company. I have worked with them and continue to work with them personally when I partner with my private lenders who want to buy real estate in their IRA’s.

Equity Trust Company employs a number of self-directed IRA custodians that are specialists in serving the needs of IRA account holders. They meet all of the criteria mentioned above in terms of experience, professionalism, credibility and financial stability. It is the largest company of its kind in the United States and this didn’t happen by accident.

If you are interested in investing in real estate, you may need some extra help. The self-directed IRA custodian cannot help you find the right deals. Until recently, that was entirely up to you. Now, there are experienced real estate investors that exclusively do this. With the right custodian and a little extra help, you can use real estate in your IRA to dramatically increase your chances that you will have the money that you need for the retirement that you want.

Adam King is the president of Mosaic Investments, LLC. Mosaic is a real estate company that partners with private individuals and lending corporations nationwide in order to finance and/or rehab investment properties. This is done by using a “turn-key” real estate system Adam King created called the ILOC program. To learn more on how you can obtain high rates of return on your IRA, CD, or other source of private money, visit http://www.ira-and-privatemoney.com now.

Article Author :Adam_D._King