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WHAT DOES AN IRA CUSTODIAN DO?
Your self directed IRA custodian or facilitator works as the bank and is highly regulated by the IRS, state and federal banking commissions and has to meet stringent federal requirements in order to keep their good standing.
With a standard self directed IRA, the custodian is responsible for everything including, but not limited to:
Approval of the purchase
Signing of all contract and closing documents
Opening of the bank account
Payment of all expenses
Reconciling the bank account
Contracting with property managers and caretakers
Insuring you are not breaking any IRS rules
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As you can imagine, this is very time consuming and can become very expensive. All self directed IRA custodians charge fees for their services and rates vary from company to company. These fees are one of the things you will want to take into consideration when choosing the company you do business with.
With a Checkbook, LLC the self directed IRA custodian is responsible for:
Insuring you are not breaking any IRS rules
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It depends on how much control you want and how much time you have to invest. It may be more advantageous for you to have someone else manage the property and pay more fees to have them do that. On the other hand, you may want to have more say in the management of your properties and be able to purchase investments without waiting for paperwork to clear.
Remember the self directed IRA custodian is not allowed to advise you on your investments. They cannot tell you if the property you are considering is a “screaming deal.” All they can do is make sure the purchase and management of the property are done within IRS guidelines.
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