Equity Trust Company

[Bill Nolan]

I am looking to get into REI and have six figures in retirement accounts to potentially obtain multi family in Chicago market. Friend / Mentor uses Equity Trust Company to purchase and hold real estate in IRA through this vehicle. Does anyone have experience positive or negative?

[Brian Eastman]

@Linda Weygant

Your understanding of the process lines up with the marketing promotion of Equity Trust and many of their custodial competitors, but unfortunately not the reality.

Custodians want you to think that they have your back and that they are "reviewing" your transactions.  This is simply not true.  You and you alone are responsible for the compliance of your investment transactions.

Here is the Equity Trust Investment Direction form.    See the disclaimers on the last page.

https://evantage.trustetc.com/forms/Trustetc_Forms...

I would specifically point out paragraph 7.

The form is secured in a fashion that I could not easily cut and paste, but the key point is that they have absolutely no responsibility to ensure compliance with IRS rules.

When they review your paperwork, they are simply ensuring that you have provided everything required for them to accurately document the transaction - nothing more.  Sure, they have good intentions and if you were to try and have them issue a check to someone who shares your last name, as an example, they may stop and ask questions.

When you do receive support from a custodial institution such as Equity Trust, it is generally coming from a marginally trained individual whose role is customer service and paperwork administration.  The folks who answer the phones are not licensed to provide tax, legal or investment advice.  They are just normal clerks trying to be helpful to the best of their abilities.

Over the course of more than a decade in this field, I cannot tell you how many times we have taken on a new client - or in some cases rejected a "poisoned" account - where there was information provided to a client by a custodian that was completely off the mark and put the client very much at risk.

Your point about wanting to have meaningful guidance so that you can adhere to the rules is critical, and is one of the most important things to know and understand about using a self-directed IRA or Solo 401(k). Getting that advice from a qualified source such as a licensed CPA or tax attorney is the only meaningful way to accomplish this goal.