An IRA depositary, such as Pacific Premier Trust, is a highly regulated bank, credit union, or non-custodial bank that is allowed to guard the assets of an IRA. Both the state and federal governments supervise custodians, and there are strict internal policies, procedures and controls. An Individual Retirement Account (IRA) offers investors certain tax benefits for retirement savings. Some common examples of IRAs are the traditional IRA, the Roth IRA, the simplified employee IRA (SEP) and the employee savings incentive compensation plan IRA (SIMPLE).
Custodians maintain all IRAs for investors. Custodians may include banks, trust companies, or any other entity approved by the Internal Revenue Service (IRS) to act as custodians of an IRA. Most IRA custodians limit IRA account holders to stocks, bonds, mutual funds, and certificates of deposit approved by the company. It's important to note that IRA custody restrictions are not the same as those of the IRS on IRAs themselves or rules based on tax legislation.
When selecting a self-directed IRA depositary, knowing their industry experience is important for building trust in their services. These firms do not meet the IRS requirements to be custodians or trusts and cannot own the assets or issue funds. Custodians undergo on-site examinations carried out by bank regulators to verify that they follow standard rules and that they are financially stable. IRA custodians must comply with IRS requirements in order to have the authority to own ownership of their clients' assets, investments, or properties.
Marketable securities, such as mutual funds or stocks, require no effort to choose a custodian; however, IRAs that have alternative investments, such as private notes, precious metals or real estate, need a self-directed IRA custodian. Once the right IRA and investments are chosen, the main factors that will distinguish one custodian from another are investment options, fees, and customer service. However, in financial services, an SDIRA is simply an IRA in which custodians allow the account owner discretionary control over investing in investment products other than traditional stocks, bonds, and mutual funds. A manager or promoter must transfer investor funds to and from a depositary to complete transactions.
An administrator is a company or person that performs the work that a custodian would normally do if the custodian offered the possibility of holding private investments in IRAs. Both managers and facilitators can act as intermediaries between the owner of the IRA account and the associate custodian who owns the assets. A self-directed IRA is an IRA held by a custodian that allows you to invest in a larger set of assets than is allowed by most IRA custodians. If you already have several IRAs, some experts advise you to consolidate them into a single account and deposit if possible.
With both traditional and Roth IRAs, you can choose to have the account managed (i.e., the depositary makes most investment decisions) or to manage it yourself. Self-directed IRA managers and promoters are different from custodians and their services are limited. To complete transactions, a self-directed IRA administrator must establish a relationship with a self-directed IRA custodian or trust that is authorized to hold IRA funds and investments.