A Guide to Choosing an IRA Custodian

Choose your IRA custodian according to the investment types that you would like to make. Check out the options that they offer, as well as the fees that they charge before you may a decision. Otherwise, you could end up paying more than you need to with a company that offers fewer services.

Under the tax law, every qualified retirement account is required to have a qualified IRA custodian. An individual can only offer the service if they meet the requirements set down by the IRS.

It’s not that difficult to qualify. Most brokers are approved. Most bankers are too. I would suggest that you avoid the guy down the street that just hung out a shingle. You want someone experienced and someone you can trust.

An IRA custodian is basically an account manager, but holdings within the account are deeded to his or her name or the name of the company that they work for. For example, if you are holding a piece of real estate within the account and your name is Warren, the deed will read “IRA custodian’s name or company’s name for the benefit of Warren’s individual retirement account”.

That’s why you should be able to “trust” your IRA custodian. The company is basically holding your retirement wealth in their hands. You should also look at the fees they charge.

The best choice is a company that charges a basic set-up fee and a reasonable annual charge. Otherwise, transaction fees, check writing fees, processing fees, asset administration fees and any number of hidden fees may be charged, as long as they are considered customary.

If you are opening a self-directed account, choose according to the types of investments that you would like to make. Not all companies offer all of the options that are allowed under the tax laws.

For example, real estate is an increasingly popular choice for retirement accounts, but the average IRA custodian does not offer the option. With the condition of the stock market, today, the need to diversify is greater than ever.

You simply cannot fund your retirement by investing in stocks, bonds and bank certificates of deposit. Bonds and CD rates of return are hardly enough to keep up with inflation, particularly if you only have a small amount to start with.

Some banks are offering high rates of return on large opening balances, but for the small investor, the rate is less than three percent for IRA CDs and money market funds. The rates are actually higher for non-IRA types.

It’s seems like banks don’t want your retirement money. But, actually, they want to encourage more people from the general population to invest. They are almost guaranteed to get some retirement account investors, since it is the only “insured” investment type.

There are many success stories from people who have chosen to include real estate in their retirement portfolios. If you know very little about the market, there are plenty of people willing to help you learn.

Your IRA custodian cannot give you the investment advice that you need. But, others can. So, choose the right company and get the right advice. Soon, you’ll be on your way to making a million, possibly even more.