How to Choose the Best IRA Custodian

Building a secure retirement takes planning, and a key part of that plan involves choosing the right IRA custodian. A custodian is a company entrusted with holding your investment assets for safekeeping. With so many options available, picking the best IRA custodian can feel overwhelming. You might wonder: What exactly does an IRA custodian do? Are there different types? Can my IRA be transferred or rolled over? 

Because your retirement savings are crucial for your future, choosing the right IRA custodian for you is important. We'll break down what to look for in an IRA custodian so you’ll have greater confidence as you choose the right one for your personal retirement goals.

Understanding the Role of an IRA Custodian

Think of your IRA custodian as a silent partner working behind the scenes, holding and changing what your retirement may look like. They allow you to focus on long-term planning and making informed investment decisions while protecting your retirement in accordance with IRS regulations.

A custodian securely holds your retirement assets including stocks, bonds, and mutual funds. They track your contributions, investment gains, and investment losses providing you with regular statements. They will also handle your buy and sell orders, which are your instructions to buy or sell specific investments within your retirement account.

Because IRAs come with specific IRS rules to maintain their tax-advantaged status, your custodian ensures every transaction follows these regulations. This saves you the hassle of navigating complex tax codes and potential penalties for non-compliance.

All of this is to give you increased confidence in knowing your retirement savings are secure and managed properly in accordance with any federal regulations.

What IRA Custodians Don’t Do

Custodians are not financial advisors or tax professionals. They won't tell you what investments to choose or how to manage your portfolio. This decision-making responsibility falls on you (however, here are some essential questions to ask your financial advisor at a retirement meeting if you do talk with them). And while they ensure compliance with IRA regulations, for complex tax questions related to your IRA, you should contact a tax advisor that is right for you.

What Is An IRA Custodian?

An IRA custodian is a financial institution that safeguards your retirement investments and ensures everything follows IRS regulation. They are not financial advisors or tax professionals.

Types of IRA Custodians

Selecting the right IRA custodian depends on your investment goals. Traditional custodians, like banks and brokerages, offer a safe and simple approach with standard investment options. If you’re looking for more control, self-directed custodians allow broader investment choices, like real estate, but require you to do your own research. Understanding these options and your investment needs will clarify which type of custodian you should consider.

Traditional IRA Custodians

Traditional IRA custodians provide a secure and straightforward option for managing your retirement savings with common investment choices, including stocks, bonds, mutual funds, exchange-traded funds (EFTs), and cash equivalents, like money market funds and certificates of deposit (CDs).


Banks can be a secure and familiar choice for your IRA, offering FDIC insurance and safer investments, like mutual funds, CDs, and money market accounts. Banks are a convenient option and may include financial advisor consultations and rollover assistance. 

They are limited in investment options and have potentially higher fees compared to brokerages or self-directed custodians. Banks may suit you if you’re prioritizing simplicity and security over more investment control. Research your bank's IRA details, fees, and minimums as you consider opening an account.

Insurance companies

Insurance companies may be less common choices for an IRA custodian because they primarily offer variable annuities as their core investment option. The benefit to this is it combines features of traditional investments with insurance guarantees, potentially offering you steady income and death benefits. 

It’s important to note that variable annuities often come with higher fees and complex structures compared to mutual funds or ETFs. As a result, you may consider an IRA custodian with broader investment options for your retirement goals. If you do move forward with an insurance company, carefully research fees, surrender charges, and suitability.

Mutual fund companies

Mutual fund companies are appealing to IRA investors seeking a broad range of investment options. They offer a wide selection of mutual funds with diverse risk profiles and investment styles, allowing you to diversify your portfolio based on your goals. 

While advisor consultations and rollover assistance might be available, some mutual fund companies may have limited account features and potentially higher fees compared to brokers.  Research their IRA options, fees, and minimums before investing your retirement directly with a mutual fund company.

Brokerage firms

For investors seeking more control over their IRAs, brokerage firms are a standout option. They offer a vast selection of investment choices including stocks, bonds, and ETFs.

While there’s flexibility and potentially lower fees than banks, navigating this wider range of options requires some investment knowledge. If a brokerage interests you, research their IRA offerings, fees, and minimum investment requirements. 


Robo-advisors offer a low-cost, automated approach to IRA management. They typically focus on building a diversified portfolio of ETFs based on your desired level of risk, rebalancing it as needed, and keeping fees minimal. Robo-advisors are convenient and ideal for hands-off investors.

You should know that a robo-advisor doesn’t directly hold your IRA assets, but rather partners with an established custodian to protect your investments. Specific custodians used by robo-advisors may not be publicly disclosed, so even though there is a reputable custodian on the other side, this reinforces due diligence when seeking this option.

To get started, research different robo-advisor platforms, their investment philosophies, and fees. 

Traditional IRA Custodian

Traditional IRA custodians offer a safe and simple way to manage your retirement with established investment options like stocks, bonds, mutual funds, ETFs, and more.

Self Directed IRA Custodians

Self-directed IRA custodians are ideal for investors who crave more control over their retirement savings. Unlike traditional custodians who focus mainly on stocks, bonds, and mutual funds, self-directed IRA custodians allow you to invest in a wider range of assets. 

These additional assets include: 

  • Real estate, like income-generating properties or land for potential appreciation. 
  • Private equity, to gain access to companies not publicly traded.
  • Precious metals, so you can hedge against inflation with physical gold, silver, or other precious metals.
  • Alternative investments, like cryptocurrencies or venture capital funds (although these are select cases and regulations can be complex).

The benefit to a self-directed IRA custodian is that it gives you more control to diversify your portfolio beyond traditional market assets. This may increase your chance for higher returns. But there is an increased responsibility on your end to make these investment decisions, upping the risk and potential fees.

This approach may be right for experienced investors who understand investing and are comfortable with their own research, and for investors looking for additional assets beyond traditional ones.

Self Directed IRA Custodian

Self-directed IRAs are best suited for investors comfortable with taking a more active role in managing their retirement savings to further diversify their portfolio.

IRA Transfer Vs. Rollover Process

Navigating your retirement options may involve moving your savings around. This is where understanding the difference between an IRA transfer and an IRA rollover matters and which process will give you a smooth transition and avoid any potential tax pitfalls.

IRA Transfer

An IRA transfer is like moving from one house to another—you take all your furniture from the old house and put it into the new house. The same happens with your money. You transfer your retirement accounts from one custodian to another.

This could be for a number of reasons including potentially lower fees, access to a wider range of investment options, or a more user-friendly platform. There are really no downsides, as the transfer happens electronically and keeps your money within the tax-advantaged IRA umbrella. This also doesn't disrupt your investment growth.

Initiating the transfer is simple and you'll work with your new custodian to securely transfer funds from your old IRA. A transfer ultimately allows you to consolidate your retirement accounts or find a custodian that better suits what you’re looking for.

IRA Rollover

Unlike an IRA transfer that moves from one custodian to another, an IRA rollover moves your retirement savings from a non-IRA account, like a 401(k), into an IRA. 

A couple reasons why you’d do this: (1) IRAs offer a wider range of investment options compared to some employer-sponsored plans, and (2) having all your retirement savings in one place simplifies managing and tracking. You can rollover your IRA in two ways. 

A direct rollover means your employer distributes the funds directly to your new IRA custodian. This is a relatively safe option as it avoids some tax implications or penalties, and you’re completely hands off. 

An indirect rollover means you receive a check from your old custodian for the amount. You then have 60 days to deposit the full amount into your new IRA to avoid taxes and potential early withdrawal penalties. This option requires more responsibility on your part and makes the process more complex than it needs to be.

You can initiate a rollover by contacting your new IRA custodian and they’ll guide you through the process, depending on if you choose a direct or an indirect rollover.

IRA Transfer Vs. Rollover

An IRA transfer moves your retirement savings from one IRA to another. An IRA rollover moves your retirement savings from a non-IRA account, like a 401(k), into an IRA. This is done through either a direct rollover (employer sends funds directly) or indirect rollover (you receive and redeposit the check).

Interested in learning more about IRA custodians and finding which option is right for you? Consider attending our retirement seminars or webinars hosted by experienced financial advisors who can help you determine which option is best for you.