Self-directed individual retirement account (IRA) administrators empower individuals to take control of their retirement savings. But what do they do? How are they different from other providers like custodians and facilitators? This guide answers these questions and provides tips for finding the ideal partner.
What Is an IRA Administrator?
An IRA administrator is a company that handles the paperwork required for your retirement account. They help with the formation and maintenance of the account. An IRA administrator typically acts as an intermediary between the retirement account owner and the bank or trust company where the deposits and assets are held.
What Is an IRA Custodian?
Custodians hold the actual assets and investments in the account. They are affiliated with or owned by a bank or trust company. They are also approved and regulated by the Internal Revenue Service (IRS) and subject to the Federal Deposit Insurance Corporation’s (FDIC) regulations, the state Banking Commissioner and sometimes the Controller of Currency.
What Is a Facilitator?
Facilitators are less common but still important. Their primary role is advising and consulting with clients. It is harder to find IRA administrators and custodians who are also facilitators because most want to avoid the liability associated with such services.
What Is a Self-Directed IRA?
A self-directed IRA (SDIRA) is an IRA that gives the account holder more control over their investment choices compared to a conventional IRA. While traditional and Roth IRAs typically limit investment options to bonds, mutual funds and stocks, SDIRAs have a wider range. Examples include:
- Precious metals like gold and silver
- Private equity and venture capital
- Cryptocurrencies
- Real estate
Account holders can sometimes invest in these assets without needing a custodian to direct the funds, making SDIRAs flexible.
Self-Directed IRA Custodian vs. Administrator
Custodians and administrators play distinct roles in SDIRAs, including the following:
- Assets custody: Custodians typically hold the actual assets in the IRA. Administrators, as the name suggests, play administrative roles. They handle the documentation required to open and maintain the account.
- Regulation and compliance: Custodians are subject to stringent regulations compared to administrators. They must also ensure the IRA complies with IRS regulations, including transaction rules and prohibited investments.
- Transaction execution: Custodians facilitate the buying and selling of assets within the account. Administrators also facilitate transactions, but they do not hold the assets themselves.
While custodians and administrators differ, some companies provide both services, blurring the lines regarding their responsibilities and functions.
The Role of a Self-Directed IRA Administrator
Administrators have varying responsibilities, such as:
1. Account Setup and Maintenance
An administrator can help you complete the necessary paperwork to establish a self-directed IRA. They also maintain accurate records of account balances, transactions and investment activities.
2. Transaction Processing
Administrators can process transactions related to the purchase and sale of assets within the IRA. This role includes coordinating with custodians if they are not the custodial entity. Moreover, administrators can handle the distribution processing when you withdraw funds.
3. Compliance Monitoring
Administrators ensure that transactions comply with IRS rules. They can also prepare and file the necessary tax forms, such as Form 5498 for contributions and Form 1099-R for reporting distributions.
4. Customer Service and Support
Administrators often provide resources to help clients understand the rules and benefits of SDIRAs. Additionally, they respond to questions and address other pertinent issues.
5. Fee Management
If you work with an administrator, they can provide information about fees associated with account maintenance and transactions. Understanding expenses can help you make informed decisions.
Selecting the Right Self-Directed IRA Administrator
It is important to consider five factors when choosing an administrator for your SDIRA. These are:
1. Reputation and Experience
Look for reviews, testimonials and ratings from current and former clients. Established companies with a solid reputation in the industry are often reliable. It is best to choose an administrator with experience in SDIRAs and the type of assets you want to invest in.
2. Regulatory Compliance
Although administrators have less regulatory oversight, they must still comply with certain rules. For instance, ensure they adhere to the IRS regulations and are duly registered or licensed.
3. Investment Options
Confirm that the administrator allows the types of investment you wish to make. Some have restrictions on certain asset classes. For example, if you are interested in real estate, cryptocurrency or private placements, ensure the administrator supports these options.
4. Fees and Transparency
Research the applicable fees, including setup, annual maintenance and transaction costs. You want to avoid hidden and unexpected charges. Again, compare fees to get a competitive rate, but do not compromise service quality.
5. Customer Service and Support
Evaluate the administrator’s customer service. Can you easily reach someone for assistance? Are they responsive to inquiries? Lastly, a good administrator should offer educational content to help broaden your understanding.
Why Accuplan Stands out From Other Administrators
Accuplan Benefits Services, along with its sister company, American Estate and Trust, provides SDIRA administration and custodial services, making us a one-stop shop for clients. Below are five reasons why we’re your best option:
1. Specialized Focus
Accuplan Benefits Services specializes in SDIRAs and deeply understands the industry. We leverage this knowledge to provide tailored solutions.
2. Wide Range of Investment Options
Accuplan offers a broad spectrum of investment options beyond traditional stocks and bonds. Your investment options include real estate, precious metals, private equity and cryptocurrency. These investments allow you to diversify your portfolio.
3. Customization, Control and Flexibility
Accuplan allows you to control your investments. You can choose options depending on your preferred risk tolerance, potentially generating high returns. This flexibility is ideal for investors exploring niche or alternative investment opportunities.
4. Compliance and Regulatory Expertise
Accuplan complies with the applicable regulations. The team is well-versed in the rules and requirements, providing clients peace of mind.
5. Strong Customer Support
Accuplan prides itself on providing exceptional customer service. Our team is readily available to assist with your inquiries. We can guide you through the investment process and address potential issues.
Choose Accuplan Benefits Services for Your IRA Administration
Unlock your investment potential with Accuplan Benefits Services. As a leading self-directed IRA administrator and custodian, we empower you to diversify your retirement portfolio with alternative assets. Experience personalized support, transparent fees and robust educational resources. Take control of your financial future — contact Accuplan now to start your self-directed IRA journey!
Our information shouldn’t be relied upon for investment advice but simply for information and educational purposes only. It is not intended to provide, nor should it be relied upon for accounting, legal, tax or investment advice.