In general, an IRA can be established and administered by a bank, financial institution, or authorized trust company. An IRA trustee, also called a custodian, is the institution that administers the IRA plan. By law, every IRA must have a custodian or trustee.
IRA Financial Trust administers its clients' self-directed retirement accounts, but holds their cash assets at Northern Trust Company through an omnibus account to provide them with passthrough FDIC insurance.
Why you need a custodian
The IRA custodian has the right to decide what types of IRS approved investments it will allow its IRA clients to invest in, such as real estate. The majority of all banks and traditional financial institutions that offer IRAs only permit their IRA clients to invest in traditional assets, such as equities, mutual funds, and ETFs.
The reason behind this comes down to dollars and cents. Simply put, traditional financial institutions do not make money when you purchase investment assets they do not sell, such as real estate. In other words, if you want to buy real estate or make alternative asset investments using an IRA, you need to use a special IRA custodian that allows for alternative asset investments, like the IRA Financial Trust Company.
A Self-Directed IRA custodian, also called a passive custodian, allows IRA holders to engage in alternative asset investments, such as real estate. Unlike traditional banks and financial institutions, a self-directed IRA custodian does not sell investment products or provide investment advice. A self-directed IRA custodian generates income by facilitating IRS approved alternative asset investments and providing annual IRS administration. Without using a self-directed retirement account custodian, you will not be able to invest in alternative assets, such as real estate or cryptocurrencies, using a tax-deferred or tax-free retirement account
What we do as a custodian
The IRA custodian is essentially responsible for maintaining and administering the IRA. To this end, the IRA custodian is tasked with the responsibility of complying with all IRS reporting requirements with respect to the IRA, such as the filing of IRS Forms 5498 and 1099-R.
In other words, in order to establish a self-directed retirement account, such as an IRA, 401(k), Health Savings Account (HSA), or Coverdell ESA, to invest in alternative asset investments, such as real estate or cryptocurrencies, one must open an account at a self-directed retirement account custodian, such as IRA Financial Trust Company. Traditional banks and financial institutions, do not allow their IRA holders to invest in alternative assets, such as real estate, for the simple reason that they don’t make any money from those investments.
Cryptocurrency & ICO expertise
IRA Financial Trust is one of only a few self-directed retirement account custodians that is servicing the cryptocurrency, ICO, and digital asset marketplace. IRA Financial Trust has developed an expertise in working with clients to purchase cryptocurrencies and ICOs using self-directed retirement assets with a number of the major cryptocurrency exchanges. In addition, IRA Financial Trust has also taken custody of cryptocurrencies, such as bitcoin and Ethereum for clients.
It's easy—opening an account takes just minutes.
We're also here to answer questions! Don’t know which plan you qualify for? Have questions about a transaction? Our tax professionals will get back to you ASAP.
We can handle the process by phone, email, fax, or regular mail. To get started, fill out the form or call us at 1-800-472-0646. Our expert ERISA and tax professionals are on-site, which greatly reduces the set-up time and cost. You’ll be promptly assigned to one of them and they’ll help you get your self-directed retirement structure started.