Is Your Custodial Bank Or Depository Bank Secured?

What is the best way to save for your retirement? If you ask this question to any good financial advisor, he or she would recommend you to open a self directed IRA account and take the investment responsibility on your own.

And there is no doubt that self directed IRAs can offer you the best solution to grow your money as per your requirements. This will open up a lot of investment options that you could not have accessed otherwise.

As things are changing very fast and there is a lot of news that companies are deceitful about their employee retirement funds, a lot of professionals are taking the onus on themselves to save for their retirement.

To add to this, there had been a huge change in mindset. Most of the new generation professionals do not think about staying with a single company years after years. Whenever they get a better opportunity, they jump to grab it. Thus they want to take the control of their retirement investment on themselves, rather than staying with the retirement investment options offered by the new company.

Those who want to take charge of their retirement, normally go for self directed IRAs, as it offers maximum investment options and security. More importantly, with a self directed IRA, you can plan your investment according to your age, financial status and the maximum amount of risk you can afford.

However, a lot of people, who are new to the retirement investment arena, often ask if their self directed IRA plans are secured with the custodial bank or not. This is not all. They have almost similar questions about Depository Banks too.

You can simply say that your IRA account is safe with them. But our experience says that everyone is not always satisfied with such simple answers when it is about the security of their hard earned money. And they have all the right to know every aspect of the deal when their future depends on it.

So what is the real scenario?

With a self directed IRA, you have all the freedom to make any decision you feel the best. The core decision making option is on you. And the custodial bank is bound to follow your decisions. The custodial bank just works as a custodian of your IRAs and naturally you are always the owner. In fact, when you are working with an international bank or a trust, the IRA amount that is yet to be allocated by you, is kept into different depositories (depending on limits) that are federally insured. This is done to maximize the security of your money.

Almost the same can be said about Custodial Banks as they also work as a depository of your self directed IRAs that you are yet to invest. These amounts are also insured to maximize security. You can also make some arrangements like transferring your engagement with that custodial bank to another one when your primary custodial bank is in serious trouble.