Custodians, Administrators, Facilitators, and Promoters: What to Know

What is an IRA custodian?

An IRA custodian must meet IRS requirements and is subject to regulatory oversight and audits. By complying with these IRS requirements, a custodian is given authority to hold title to assets, investments, or other property, issue funds, hold clients’ money, and create a variety of clients’ accounts.

[More: Questions to Ask a Custodian]

What is an administrator?

While IRA administrators can produce statements and do basic reporting, they are not subject to the same regulatory requirements and oversight as a custodian. This difference limits them from handling the same level of authority as a custodian.

An administrator needs to be affiliated with an IRA custodian in order to be permitted to hold assets or funds. They can help you create an IRA account, but are unable to conduct transactions like a custodian.

What is a facilitator?

If you move down the scale of authority and responsibility, you will find IRA promoters and facilitators. If you’ve seen advertisements for self-directed IRA LLCs, then you have seen a facilitator.

A facilitator, sometimes also called an advisor or consultant, can provide advice and consulting services – often directing clients to establish an LLC within their self-directed IRA.

It’s important to note, a facilitator on its own does not have the capacity or authority of a custodian and is often associated with an IRA custodian to make up for this deficiency.

What is a promoter?

An IRA promoter is an investment promoter who is looking to use IRA funds to establish an investment. As with facilitators, promoters do not have the same regulatory oversight or authority to hold investments or move IRA funds as a custodian.

A promoter is simply that: promoting an investment. As with all things related to investing, it is in a person’s best interest to perform due diligence to see if an opportunity is sound in terms of financial goals and legitimacy.