The terms “IRA custodian” and “self-directed IRA custodian” technically mean the same thing. There is no precise definition of a “self-directed” IRA since all IRA accounts are self directed by their very definition.
The difference in terms was most likely created as part of a marketing campaign to convince people that they should take control of their IRA by “self-directing” it. Regardless of the origins, the term “self-directed” helps to define what is quickly becoming a familiar term to describe an IRA which invests in alternative investments.
One of the requirements in the Internal Revenue Code (IRC) is that all IRA assets are held by a custodian. An IRA custodian can be split into two different specializations. The first type is the IRA custodian that specializes in publicly traded securities. This type is more commonly known due to the high percentage of the population which invests in stocks, bonds, and mutual funds.
The second type is the IRA custodian that specializes in alternative investments, also known as a self-directed IRA custodian. This type is less commonly known due to the much smaller percentage of the population which invests in alternative investments with their IRA.
There are firms that use either traditional or self-directed IRA custodians and there are firms that use them both.
Are you interested in setting up a self directed precious metals IRA or rolling over an existing IRA? Let Regal Assets guide you along!
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