How To Choose the Right Self-Directed IRA Custodian

Key Points

An IRA must be held by a custodian, such as a bank, authorized trust company, or another entity approved by the IRS to act as an IRA custodian.
Opposed to most brokerages, Self-Directed IRA custodians allow you to invest in alternative assets like real estate, precious metals, and more.
To choose the best Self-Directed IRA custodian research their client reviews, security measures, and fees, among other factors.
Madison Trust offers a flat-fee schedule, unmatched client support, secure investing, and a streamlined investment process.
Choosing the best Self-Directed IRA custodian is essential for the success of your retirement investing. However, what qualifies as the “best” custodian can differ based on a number of factors. How hands-on do you want to be? How much are you looking to spend? Do they offer the type of asset you are looking to invest in? What are their current clients saying about them? Let’s start by discussing what a Self-Directed IRA custodian is and then we’ll explore the elements to consider when making a choice.

What is a Self-Directed IRA Custodian?

The Internal Revenue Code (IRC) Section 408 details that all IRAs must be held by a custodian, such as a bank, authorized trust company, or any other entity approved by the IRS to act as an IRA custodian. A Self-Directed IRA custodian is responsible for the following:
Holding the account’s investments in custody
Making transactions based on the direction of the IRA account holder
Complying with all IRS reporting requirements regarding the IRA, which includes filing IRS Forms 5498 and 1099-R
Maintaining the tax-advantaged status of the IRA

A Brief History of Self-Directed IRA Custodians

Most banks and financial institutions that offer IRAs limit account holder’s investment options to stocks, bonds, and mutual funds. However, as a result of the 2008 financial crisis many investors quickly became aware that alternative assets are the key to a diversified portfolio and can provide a hedge against the stock market. Therefore, to facilitate investing in alternative assets such as real estate, private equity, startups, promissory notes, and more, specialized Self-Directed IRA custodians, like Madison Trust, were established.

How To Choose The Best Self-Directed IRA Custodian

All Self-Directed IRA Custodians are governed by the same rules, but that does not mean they all offer the same benefits. When researching which custodian is best to achieve your investment goals, be sure to consider the following:
Client Service Model and Reviews

There’s nothing more telling about a company’s commitment to amazing customer service than client reviews. Custodians should be as clear and transparent as possible with all matters involving your retirement funds. When you call Madison Trust you will be serviced by a knowledgeable, friendly representative. Our clients are our primary focus and we are committed to excellence.
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When you call Madison Trust you will be serviced by a knowledgeable, friendly representative. Our clients are our primary focus and we are committed to excellence. This is evident through our A+ rating on the Better Business Bureau and the highest rating in the industry across all online rating platforms (such as Google, Yelp, Shopper Approved, etc.). We take our role in securing our client’s financial future seriously and strive to provide the easiest and most productive experience every time you contact us.
Excellent Security

When deciding on a custodian to hold your IRA, it is best to ensure that there are systems and controls in place to protect your personal and financial information. At Madison Trust, we take your security seriously. Your personal information is never sold to a third party. The employees who have access to this information are limited to those who need it to perform a specific job (for example, billing). Your sensitive information is protected online through encryption technology.
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We also train our employees to be vigilant when handling personal information and to be on the lookout for any potentially fraudulent or suspicious activity. When you call Madison Trust, before we provide any account-specific information, we have a system in place to ensure we are speaking to the proper party. For more information, please visit our privacy policy.
Low Fees

Every custodian has a unique fee schedule and the only way to find out the fees for each is to make individual queries. Madison Trust employs an inexpensive, flat-rate fee schedule that never surprises you with unexpected or hidden fees.
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Madison Trust’s fees remain the same no matter how much money accumulates in your account. You will never be charged more for being successful.
Wide Array of Asset Choice

When choosing an IRA custodian, be sure to understand which type of assets you are looking to invest in. Are you looking to go the more traditional route and invest in stocks, bonds, and mutual funds? Or, are you looking to diversify your portfolio even further by investing in alternative assets such as real estate, private equity, promissory notes, or more?
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When you create a Self-Directed IRA at Madison Trust you have the power to invest in almost any alternative asset. Our team understands a wide array of asset classes and is here to answer all of your questions.
Ease of Account Set Up and Investing Process

The earlier you start saving and investing in your retirement, the better. Once your Madison Trust account is set up and funded, you can start investing immediately.
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In addition, some custodians strictly hold custody of your Self-Directed IRA investments and do not offer any other services (such as the creation of an LLC). Madison Trust works closely with our sister company, Broad Financial, to provide the entity creation, support, and custody of your Self-Directed IRA together for a streamlined experience.
Size and Industry Expertise

The size of a custodian’s business tells you about their experience and expertise. If a company has a limited amount assets under custody, it may have fewer capabilities. Madison Trust has $4 billion+ in custodial assets, 15,000+ clients, and 1,500+ positive reviews, displaying our knowledge to accommodate all different types of assets.
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Our team has CISP-trained Specialists, which is the highest training an IRA Specialist can receive, making us well-versed in the IRS rules and regulations for holding alternative assets in an IRA. We provide coverage of our IRA accounts and a dedicated support team for the entire U.S.

The Power of Madison Trust

Incredible Client Support

Madison Trust was created with one goal: give retirement investors an amazing financial experience. The first step in that experience is unparalleled customer service. You’ll always be able to speak to a live and knowledgeable representative.
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Straightforward Fees

Madison’s Self-Directed IRA allows you to skip the asset-based fees and manage as you see fit. Amongst the lowest in the industry, our flat rates help ensure the profitability of your investments. Now you will never pay more for being successful.
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Industry
Knowledge

Madison Trust Specialists have completed rigorous CISP training and have a deep understanding of a variety of alternative asset classes. That means every answer you will get is financially informed, no matter what asset you choose to invest in.
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Self-Directed IRA Custodian – FAQs

What types of Self-Directed IRA custodian fees are there?

Each Self-Directed IRA custodian offers a different fee schedule. The possible fees that can be charged by a Self-Directed IRA custodian include:

  • Setup – one-time fee to cover initial setup
  • Administrative – a series of fees that cover administrative functioning like processing rollovers
  • Transaction – series of fees that are applied for every requested transaction (e.g. purchasing an asset)
  • Asset-based – a fee charged to the account based on the overall value of the account
  • Annual maintenance – a fee charged annually or quarterly to maintain the IRA account

Please see Madison Trust’s fee schedule for more information regarding our fees. 

How do I get started and open a Self-Directed IRA?

Self-Directed IRAs have always been possible, they’re just not well known. The reason is because most big brokerages deal exclusively with stock market products. By opening an account with a specialized self-directed custodian, you get the freedom to invest in what makes sense to you.

It is a simple 3 step process to open a Self Directed IRA at Madison Trust. 

(1) Create an account by completing an online application 
(2) Fund your account 
(3) Instruct Madison Trust to invest in the asset of your choice by filling out an Investment Authorization Form.

Visit How To Set Up a Self Directed-IRA for more information.

Why haven’t I heard of a Self-Directed IRA custodian?

Self-Directed IRAs have always been possible, they’re just not well known. The reason is because most big brokerages deal exclusively with stock market products. By opening an account with a specialized self-directed custodian, you get the freedom to invest in what makes sense to you.

Ready to invest in your future?

Reach out to our team, and we’ll answer all of your questions.
Corporate Headquarters:
Madison Trust Company 401 East 8th Street • Suite 200
Sioux Falls, SD 57103
Mailing Address:
Madison Administration Company One Paragon Drive • Suite 275
Montvale, NJ 07645
Hours:
Monday - Thursday: 9:30AM - 5:30PM EST
Friday: 10:00AM - 4:00PM EST
Saturday/Sunday: Closed
Contact:
(800) 721-4900
[email protected]
F: 845-947-1212
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