No, an IRA custodian cannot be an individual. Government agencies and laws do as much to protect the investor (you) as much as possible by stating that Individuals cannot legally be the custodian of an IRA. So what is an IRA custodian. IRA custodians are financial institutions such as brokerages or banks that have pledged to take fiduciary responsibility over a clients assets. This means that the financial institution must act in the best interest of the client.
Established in 1974 by the Employee Retirement Income Security Act, self directed IRAs can be a great piece to retirement plans for the self employed. In 2011 the average IRA fund was over $91,000. They are so successful that when measured in 2012 statisticians found that one out of every three people in the United States had one. However they do not come without their own caveats. Finding an IRA custodian that meets your retirement objectives can be one of the hardest aspects of owning an IRA.
Here are some explanations of how an IRA works and what to look for from IRA custodians.
Self directed IRA rules can get tricky, because there are usually at least two sets. This is because IRAs are subject to both the rules of the IRS and the IRA custodian. When looking for IRA custodians you should consider how clear they can make these rules to you.
As IRA custodians many financial institutions take measures to limit the risks your IRA is open to. This means that while it is legal to invest money from an IRA in real estate, tax liens, franchises, and mortgages just to name a few, not all IRA custodians will allow your hands to be in all of these pots. Just think, what if you invested all of this money from your IRA in various plans and each of them fell through. The fiduciary aspect of your
Know your IRS IRA contribution limits. For instance as you begin saving you may want to know that the maximum IRA contribution for persons under 50 is $5,500. As you learn about limitations you will also want to know what the IRS rules for IRA withdrawals is. Knowing what happens when you take out the money prematurely may change your mind about which circumstances warrant such an action.
Ultimately the key is to look for a partner in investing. Your IRA custodian will be this for the length of your IRA so keep this in mind as you sift through possible IRA custodians. Pay attention to what kind of investments they will and will not allow you to make. Another quality to consider is what charges will be imposed if. There are many kinds of if statements that your future IRA custodian will protect you against by charging you for the activity. Take these two aspects into consideration and learn both the IRS regulations and the regulations of your potential IRA custodian before committing. For more about this, go here: iracheckbook.com