Banks, credit unions and savings associations often act as trustees or custodians, and there is no need to file a return with the IRS to act as trustees or custodians of the IRA. Other entities, such as brokerage firms and mutual fund companies, generally don't automatically qualify to act as trustees or custodians. The IRS maintains a list of entities approved, under Section 1.408-2 (e) of the Treasury Regulations, to act as trustees or non-bank custodians. Pursuant to section 408 of the Internal Revenue Code (IRC), an IRA can only be established and managed by a bank, financial institution, or trust company authorized in accordance with state law.
Physical Gold in IRA is also allowed under this section of the IRC, allowing investors to diversify their retirement portfolios with physical gold. An IRA trustee, also known as a custodian, is the institution that manages your retirement account. By law, every individual retirement account must have a custodian or a trustee. In other words, to set up an individual retirement account, you must open the IRA at a bank, financial institution or authorized trust company, such as IRA Financial Trust. The reason for this is that not all IRA custodians allow their clients to make alternative investments.
The IRA depositary has the right to choose what types of investments approved by the IRS their customers are allowed to invest in. On the other hand, IRA Financial Group can facilitate your self-directed IRA with a different custodian if you so choose. The self-directed retirement custodian will make the self-directed retirement investment of alternative assets on behalf of the owner of the IRA and will provide custodial services. The depositary of a self-directed IRA must be fair and honest and ensure that their assets are safe and available when you need them.
For example, before Adam Bergman, a partner at IRA Financial Trust Company, founded IRA Financial Trust Company, IRA Financial Group acted as an administrator and had links to several custody options from which clients chose. If you're looking for an all-in-one custodian and administrator, there's nothing better than IRA Financial Trust. The self-directed IRA depositary is responsible for processing all IRS reports regarding the IRA, including filing IRS Forms 5498 and 1099-R. On the other hand, a self-directed IRA depositary (also known as a passive custodian) allows IRA holders to make non-traditional investments and never offers investment advice or sells investment products.
Each IRA depositary is free to determine what IRS-approved investments will be available to their customers. If you already have a traditional IRA through a bank, trust company, or credit union, you know what a custodian is. In fact, almost all banks and financial institutions, which are the custodians of an IRA, do not allow their customers to use IRA funds to make investments in alternative assets for the simple reason that they do not make money with those investments. You should open a self-directed IRA with a special custodian called a passive custodian or custodian of a self-directed IRA that allows you to make investments in alternative assets, such as real estate.