Who is the Custodian?

Created March 07, 2022 22:07

What does a custodian do if I purchase an IRA?

Our custodian partner creates your IRA structure.

In a Direct Custody IRA, the custodian checks and approves investments to make sure they follow IRA rules. This review is not investment advice but to ensure your investment is not a prohibited transaction. If a custodian accepts an asset, they agree to custody the asset on behalf of your IRA. A custodian holding an asset does not mean it is safe from investment losses.

For the IRA LLC, the custodian holds your LLC and all investments owned by the LLC. This empowers you to hold custody of your own self-directed assets in the name of your IRA LLC. Our partner bank helps you custody of the remaining cash assets. This differs from a standard custodial IRA, where a financial broker-dealer and custodian would directly own and hold an asset FBO (for the benefit of) a customer.

For an IRA LLC, the custodian holds a single-member LLC, which is owned by your IRA, and investments are held by the LLC, thus falling under the umbrella of the IRA. This allows you to make investments without going through a custodian reviewing each transaction but also increases the risk of prohibited transactions. The LLC structure is convenient for people making many transactions, such as real estate investors.

What about custody with the Self-Directed Solo 401(k)?

Rocket Dollar provides plan documents that are pre-approved by the IRS, which allows you to self-custody assets in the name of the retirement trust. There is technically no traditional "custodian" held in a retirement trust that is tied to your business or sole proprietorship. The retirement plan, not you or your business, is owning the assets. Our partner bank then helps you custody of all cash in an FDIC-insured account.

Is your bank partner FDIC insured?

Yes. You can read more here.

Who are the custodian partners Rocket Dollar works with?

Rocket Dollar’s Primary Custodian Partner is Digital Trust and works with Bank United as the Primary Banking Partner for customer accounts.

Can I choose my own Custodian and Bank?

No. Rocket Dollar has chosen its partners based on an extensive review process. Most banks, while being able to open regular LLC or trust bank accounts, do not understand working with an IRA LLC or Solo 401(k). Direct Custody clients won’t require a Bank United account and will work only with Digital Trust. If you are unsure which account to sign up for, please contact our sales team.

What about the IRS list of Approved Non-Bank Custodians?

When it comes to IRA custody, if you have a Trust Charter, you can custody IRAs and assets. Rocket Dollar does not have a Trust Charter but works with our custodian partner and their trust charter/custody capabilities. Digital Trust is a chartered trust in the state of Nevada.

If other custodians are providing custody of my actual assets, what does Rocket Dollar do?

Rocket Dollar provides onboarding, technology, and service to make opening and operating a self-directed account as safe, simple, and efficient as possible. Regardless of the type of account you have with us, Rocket Dollar ensures that reporting and compliance are handled in a timely manner, as well as answers any questions you have along the way. Our support team is always on hand to provide assistance with transfers, rollovers, investments, or contributions.

Rocket Dollar has also negotiated fees on your behalf with our service providers to ensure you always know what you’re going to pay, with no hidden fees.

Is Rocket Dollar a Broker, a Fiduciary, or a CPA?

No. Rocket Dollar is not a broker, as we do not sell or recommend specific investments. We feature partners who can accept retirement funds on our partner's page, but we do not vet or recommend specific deals on their platforms.

We are also not a fiduciary, which would take a level monthly, quarterly, or yearly fee to recommend investments based on your personal situation. We provide educational and informational content on our blog and Knowledge Base.

If you feel visiting a fiduciary advisor would assist you in selecting your investments, Rocket Dollar encourages you to do so.

Rocket Dollar provides administration, technical and support to help you with your Self-Directed IRA or Solo 401(k). Your monthly fees go to providing continued support and technical improvements to the Rocket Dollar customer dashboard.