Trust Companies and Custodians

First IRA is a wholesale, commercial lending company, exclusively focused on non-recourse IRA mortgages.  We provide mortgage money to self-directed IRA trusts and retirement plans that need financing to buy investment real estate.   We do not provide loans for residential or owner-occupied properties.

The loans that we invest in are non-recourse loans made to IRAs and 401ks, that are owned by individual investors. We do not speak with the IRA account holder. That is the mortgage broker's responsibility.

Trust Companies / Custodians are an integral part of a successful, self-directed, IRA real estate transaction. Additinally, there are companies called Administrators that also could be involved in a self directed IRA transaction.

Trust Companys/Custodians ("custodians") and Administrators are a very important component to the self-directed IRA transaction. At First IRA we strive to set a "high bar" and we require our channel partners to maintain a high degree of responsibility.

We require that all loan documents be signed by the IRS §408(n) custodian that is associated with the IRA account holder as well as the IRA account holder (or LLC manageing member). This is protection for all involved: The administrator, the custodian, the lender and most importantly the IRA account holder.  

We will allow an administrator the ability to sign on behalf of the IRA Account (or LLC) custodian with written permission from the IRS §408(n) custodian that oversees the IRA.

What is a Custodian/Trust Company?

IRS §408(n) says that a trust company / bank can oversee IRA accounts.

• Bank
• Credit Union
• Approval from IRS
• Regulated by state banking

So the funds that are rolled need to roll into an IRS §408(n) company.

There are two types of custodians

1.) Traditional Custodian
- Only allows account holder to purchase a segment of investment choices like stocks, bonds, mutual funds, etc…
- Usually just listed products, easy to account for and oversee.
- (i.e. Fidelity, Schwab, Merrill, Morgan, etc)

2.)  Non Traditional Custodian
- Allow account holder to purchase many more investment choices beyond just stocks, bonds and mutual funds. Offer “self directed IRA’s and solo 401k’s
- Requires broad knowledge, licensed by state banking.
Examples of Custodians: (i.e. PENSCO Trust, Millennium Trust, Fiserv, etc…)

What is an Administrator?

Anyone could be an administrator.
Administrators:
- Provide guidance
- Non licensed, non §408n entities
- Not trust companies, but charge a fee to oversee the transaction, roll the funds, accounting.

To stay within our interpretation of the IRA rules and regulations, ALL administrators must use a §408n custodian

If they do not, our interpretation is that the funds could be considered a distribution.
According to the DOL, all retirement funds need to be deposited from a §408n company directly into another §408n company when 401k funds are rolled from your existing 401k plan

Examples of Administrators: (i.e. Guidant Financial, Entrust, Security Trust, etc…)