subject: The Custodian's Role [print this page] Currently the most popular way to save for retirement is the self directed IRA. This retirement account can be set up outside of employment. Most individuals like this IRA so much because it gives them the control on their portfolio.
Investors can choose to do a diverse portfolio or a strict one. They decide what is too risky or conservative for them. Investors must have a custodian with a self directed IRA.
Custodians manage the IRA. Examples of a custodian are a broker, bank, or trust company. Every custodian has different restrictions on investing because not all of custodians offer real estate as an investing option.
Each of these companies also has a fee for managing the account. Every company has their own prices and regulations for charging their clients. It is very important that investors do their research before they select one.
Some fees are a flat rate for specific services. There are also called asset-based fees and they tend to be more complex. Examples of asset-based activities are opening the account, wiring the money, and liquidating the assets.
Major banks and brokerage companies do not often offer a true self directed IRA. It is not a true one because they offer investing options like stocks, bonds, and mutual funds. Individuals can only invest in options that they offer, so if the individuals want something else they are out of luck.
A true self directed IRA can be found through banks or trust companies that do not offer investment choices. The custodians are there to follow what the investor decides and manage the account. Occasionally when asked, custodians can offer their opinion to the investor.
There is a custodian that gives all of the control to the investor and the IRA is called a self controlled IRA. The investor literally has all of the control and does not need the custodian's permission on certain regulations. Individuals who have had experience in IRAs can do this, but others should wait for more experience.
