What the Heck is an IRA Custodian?

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It never fails to amaze me when I talk to people about investing and IRA custodians. Many don't even know what an IRA Custodian is. All they know is that their money is invested somewhere, hoping that it will grow into something substantial over the years, until they are able to retire.

Basically, an IRA custodian is a fancy but correct term for a bank, savings and loan association or other financial institution that does its best to put money into your IRA (Individual Retirement Account)by investing your money for you. A custodian is another word for a guardian or caretaker. So, when you think about an IRA custodian for you, you want a financial institution that will tenderly and efficiently take care of your IRA, including real estate investments using your IRA money.

Don't Do It Yourself

In America, if you have an IRA, you are required by law to have an IRA custodian. One of the reasons for this is that the government wants control over when you can use this money to supplement your retirement income. An IRA should ideally multiply like coat hangers in a closet. Your IRA custodian watches over your funds and directs where and when your money is invested.

You are not completely at the mercy of your IRA custodian. IRS law does allow you to make the decisions about where you are going to invest the money, whether it is stocks or real estate. You can still have a self-directed IRA and have an IRA custodian that will help you direct your funds.

You can even have your IRA custodian direct funds for the purchase of Real Estate.

This means that even if you are not a banker or broker, but know the real estate market of the area in which you long to buy property to invest in, you can still get the property you want without having to get the approval of your IRA custodian.

There are a lot of details involved with any IRA real estate investment, and this is where your IRA custodian can save you a lot of headaches. It has been my experience that buying real estate with my IRA was the easiest and fastest way that I have ever purchased a property.

Your Role Is Vital

One of the reasons some people prefer to use their IRA to invest in real estate is that they feel more in control of their money. Often, it seems that decisions about your money are made in some ivory tower up in the clouds where mere mortals like you are not allowed to reach.

But with a good IRA custodian and your own knowledge and research of the property you want, you can make a sound investment decision and watch your money grow at a pre-calculated rate of return.

With the right techniques and knowledge, you can even force gains on your investment dollars.

Your IRA custodian will be able to help you stay within IRS guidelines with your IRA real estate investment. It is up to you to do your homework and choose good properties to invest in.

Do Comparison Shopping

In conclusion, choosing an IRA custodian is similar to shopping for any major purchase or a bank loan. You don't just go with the first one you come across. You want to take the time to compare benefits, backgrounds, any advantages the IRA custodian offers and how quickly they respond to your questions.

Self Directed IRAs are becoming popular today in that it gives you more control over your investments.

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Source by Mark Nenneman