When you open a real estate IRA, you are, in effect, opening a self directed IRA. To do this, you need the help of an experienced self directed IRA custodian. However, with the growing popularity of self directed IRAs, finding a qualified custodian in between all of the other types of self directed IRA companies out there can be quite difficult. Here are some things you can look out for in order to determine whether or not the company you are looking at is truly a real estate IRA custodian or not.
Administrator
Some companies who purport themselves to be a real estate IRA custodian are really just administrators. An administrator is someone who can help you complete the paperwork necessary to open a real estate IRA. However, they do not have the capability of opening the account themselves nor do they have the ability to custody any assets that you purchase through your IRA. Why is this distinction important? The main reason is regulation. Administrators are not regulated by any federal regulating body nor are they required to have internal processes in place to protect your personal information. This means that the company you think is handling your IRA is not, which can result in a catastrophic loss for you in terms of your assets and/or your personal information.
Facilitator
A facilitator does not collect any personal information from you nor do they assist you in getting a real estate IRA account opened. They simply provide you with information about the benefits of having a real estate IRA. The main problem with this is that they may or may not be providing you with accurate information about what you can and can’t do with your IRA funds. They also may try and persuade you to use one particular company over another because they receive kickbacks for referrals, which may lead you to using a company you shouldn’t be doing business with.
Custodian
A true custodian is a company that will not only help you open a real estate IRA account within their own firm, but are also recognized by the IRS as having the ability to custody the assets that you purchase with your IRA. They can ensure that all of the paperwork you need is completed when you make purchases. Custodians are highly regulated companies that are held to the highest standards when it comes to conduct. They take the privacy of their customers seriously and have policies and procedures in place to ensure that your money, your assets and your personal information are all held securely.
If you are considering opening a real estate IRA for your retirement needs, take your time and find a reputable custodian in your area that can help. Not only do these entities work hard to ensure that your assets and information are secure, but are also a great source of reliable information that you can use to ensure the best results possible for your investment activities.
If you still aren’t sure about whether or not the company you are looking at is a custodian or not, consider taking a look to see if they are BBB accredited. Most non-custodial companies will not be.