What happens if SD-IRA Trustee Goes BK?

[Stephen Masek]

It seems that all self-directed IRAs are offered by relatively small companies which have somewhat recently appeared. I'm not against small businesses. However, what happens if the SD IRA trustee goes bankrupt? They have title to the property, and it gets tied-up in the bankruptcy. I see that some of them claim to be covered by FDIC. If so, that would be extremely helpful.

What have you found in your research?

If I can't be comfortable with the SD IRA companies, the only alternative is to pay the federal & state income taxes & 10% federal early withdrawl penalty, so we can buy things other than what the brokerages offer.

[Kevin Kaczmarek]

Stephen,

We have worked with some of the biggest SDIRA Custodians and a few of the smaller ones. What I have found in the smaller ones, is they are backed by a larger trust company and act as an intermediary.

I would recommend only working with a custodian that is FDIC insured, a North Dakota Trust, and has a long standing track record.