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How to Choose an IRA Custodian For Your Self Directed IRA


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When choosing an IRA custodian there are a few points you'll want to keep in mind. First and foremost, a relationship with your IRA custodian is generally a long-term relationship, so you need to feel comfortable with how you communicate with them, and vice versa.

You're going to want to find someone that you feel you can trust and has the experience needed to manage your account successfully. This is especially true if you plan to open a self directed IRA account. You'll want to make sure that the IRA custodian you choose has the experience to manage the type of investments you intend to participate in.

Clearly, IRA Custodians are a dime a dozen, but their fees and services vary considerably. Take your time to compare the services they provide and the fees they charge. There's nothing more infuriating than to be nickel and dimed to death.

The number one reason people open a retirement account is for the tax advantages. In order for the account to qualify for those advantages, you must have an IRA custodian or trustee, because the money cannot pass through your hands.

For example, with a self directed IRA account, its your decision what your IRA funds are invested in, yet it's the IRA custodian who coordinates the transaction. The custodian manages the transaction exclusively - writing checks, signing contracts, holding deeds; all for the benefit of your account.

Typically, your IRA custodian will be passive, in that he will not offer advice regarding the validity of any given investment that you choose for your self directed IRA. He may offer education about various types of IRA's and the services they provide, but advice about specific investment types must come from other professionals. Therefore, you will still need the services of an attorney, an accountant and perhaps an investment advisor.

If your chosen investment vehicle is real estate, then you will want to seek advice from investors experienced in those kinds of transactions. There are investors or investment groups that work within this niche and are available to help you find potentially profitable real estate investments. The best of these groups will be able to teach you how to make the most profits in a step-by-step program.

In sizing up an IRA custodian, ask about the types of investment opportunities they offer. Most tend to stay within the more easily managed investment vehicles such as stocks, mutual funds and the like.

Considerably fewer IRA custodians offer self directed IRA's investments, simply because of the extensive knowledge of the rules and regulations imposed by the government on such transactions. Though self directed IRA's require more expertise to manage, they offer the potential of higher rates of return.

Self directed IRA's allow you to leverage your knowledge, expertise and interests. In order to conduct real estate transactions and other less traditional types of investments, the IRA custodian you choose must offers those options, as not all of them do.

The fees charged for self directed IRA's vary, as well, so you'll want to do a little digging to find out about those. When it comes to real estate investments, it is usually less expensive to pay a set up and yearly maintenance fee, rather than per transaction fees. Individual fees for buying and selling real property, as well as fees for holding deeds can get pretty stiff.

When considering an IRA custodian for a self directed IRA, they must have a clear understanding of the “no self dealing" and the “no indirect benefits" rules. The Feds are unforgiving on these rules and that's why it's so important to choose a custodian who has a proven track record.

The bottom line is neither you nor a direct lineal relative can experience a direct benefit from any of your real estate investments. You cannot invest in a beachfront property that you and your family intend to vacation at, or buy a home for your daughter to live in. These rules are spelled out and are very specific and your experienced self directed IRA custodian should know them like the back of their hand.

Your retirement account is meant to benefit you and your heirs in the future, not today. So, your sons and daughters, as well as your parents are prohibited from benefitting from the fund, today. “Lineal" relatives are not allowed to serve as IRA custodian either.

So, get some good advice, learn the rules, find the right company and start down the road to a wealthy retirement.

Paul Clinton: Dedicated to finding ways to invest in real estate while minimizing the risk and maximizing return on investment. Using a self-directed IRA to invest in real estate, tax free, is very powerful!

To learn how you can benefit from Real Estate IRA Investments, with minimal risk click on this link:


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