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Investor Insights Blog|Business Owner? Tips for Choosing the Right Custodian for Your Retirement Account

Small Business Plans

Business Owner? Tips for Choosing the Right Custodian for Your Retirement Account


Painters, roofers, chefs and financial custodians are all wildly different professions with one central thing in common. When you do business with anyone in these roles, you want to deal with the best candidates you possibly can.

However, the difficulty of determining which is the best can vary greatly. While the work of the initial three on our list can be quickly judged by their effectiveness, a financial custodian’s efforts take time to bear fruit. Every moment you spend partnered with the wrong custodian may hurt your financial well-being.

If you’re a business owner, how do you find the right custodian for your retirement account needs? How do you differentiate one custodian from another?

Here are a couple of things to look for.

How much assistance will your custodian provide?

Your relationship with your custodian should be a partnership. Just make sure you’re not the one doing all the work.

Be wary of firms set up to sell you on a solo 401(k), also referred to as a QRP, with full checkbook control. These companies are often structured to open the account, charge a fee and then leave you on your own to process transactions, record and manage those transactions and educate yourself. It’s a daunting task and one you shouldn’t pay for.

Instead, look for a partnership and expect that your custodian will assist you with the transaction processing, record maintenance and processing, and provide you with ongoing education and training.

Finally, don’t discount the value of education. While your custodian is hired for a specific task, they should be continually educating you on better ways to handle your obligations.

Consider the custodian’s reporting capabilities and process

As we said earlier, no two custodians are exactly the same. This is also true of their reporting capabilities and process. Don’t be afraid to ask custodians to explain their capabilities and process in detail. Your custodian should also make it easy for you to access information anytime you wish, so ask potential custodians about how they make account information available to you.

The custodian should be vetting you as well

The process of selecting a custodian partnership should be twofold. While you are selecting the right custodian for you, the custodian should also be “vetting” whether you qualify for the account you seek.

This isn’t always a given, and some firms fail to ask prospective clients questions to determine if they might qualify for the plan. The result leaves would-be customers frustrated after finding out they may not be qualified for all they expected.

In order to qualify for a solo 401(k), for example, you have to have earned income through the business entity that sponsors the plan, and contributions must be “substantial and recurring,” according to the IRS. A custodian who fails to vet you properly could lead you to open an account you don’t qualify for, so it pays to ask questions about the vetting process to make sure the custodian is the right fit.

(Also note that a custodian is not a replacement for a financial or tax professional, and you should consult them before making any decisions.)

Guide to Small Business Retirement Plans_latest

Experience counts, but not all experience is the same

When it comes to handling your assets, experience is always a plus, but the nature of that experience is often more important than the simple sum of its years.

Does the custodian have experience in your industry, working with clients of a similar nature to yourself?

The custodial relationship you choose can either benefit your overall value proposition or it can be a hindrance thanks to ineffective or inflexible strategies and high error rates. Asking questions about experience early on can help protect you from the latter.

Finding the right custodian for your business

The proper custodian may play a vital role in your long-term financial stability, so whether you’re looking for your first custodian, looking to consolidate from multiple custodians or simply ensure your next custodian is your long-term partner, it pays to apply these vital differentiators.

And if you’re looking for more help to make your custodian decision, contact us today. We are here and ready to answer any questions you may have.


Do transfer funds from a previously established IRA have to be from like accounts?

Yes. For instance, if you wish to transfer funds from a traditional IRA to an Equity Trust self-directed IRA, the funds must be transferred to a traditional IRA.


How are funds transferred to Equity Trust?

Cash funds can be transferred via check or wire. All other assets are transferred either ACATS or non-ACATS.

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