By Lisa Moren Bromma
It amazes me to see the number of people starting companies that state they are custodians or recordkeepers of self-directed IRAs or who develop associations for the IRA industry that are there to “oversee” and “protect the consumer.”
With the Bernie Madoffs of the world out there trying to take advantage of our last dollar, we all need to take extra caution when selecting the right administrator for our IRA. After all, it is our future!
When doing your due diligence, here are some things to ask in your quest to find the right recordkeeper.
1. How long has the company been in business? Watch out for the new pop-up companies on the Internet. Many are not legitimate and are not regulated. Do a background check on any potential provider.
2. Ask for one simple document: the current 5305. If they don’t give it to you, move on.
3. Does the company have a custodial bank? If so, who is it? Are your deposits FDIC insured? Who regulates the bank? If you do not get a clear answer, move on.
4. Is the company’s only service doing recordkeeping on a client’s behalf? If not, does the company do any of the following:
* Sell securities, potentially profiting from your transaction
* Offer other services, such as forming LLCs or other legal structures and charge thousands of dollars for the service
* Recommend any investments, providers of investments, or any other party that could be perceived as giving advice
Make sure that the company is not using recordkeeping as a means to get you to purchase other services.
You owe it to yourself and your financial future to make sure that you are in the right hands.