To determine your deposit insurance coverage or to ask any other questions specific to deposit insurance, please visit the FDIC Information and Assistance Center or call us at 1-877-ASK-FDIC (1-877-275-334). When an economic crisis hits and the stock market falls, people are afraid for their money and how they can protect it. If you have a retirement account that is a traditional IRA or a Roth IRA, you may be wondering if it is protected by FDIC insurance? Here’s what you need to know. Self-directed IRAs allow investments in a wider — and potentially riskier — investment portfolio than other types of IRAs. Common examples of IRAs include the traditional IRA, the Roth IRA, the Simplified Employee Pension (SEP) IRA, and the Savings Incentive Match Plan for Employees (SIMPLE) IRA.
Lack of information and liquidity — Self-directed IRAs allow you to hold alternative investments, which, unlike listed securities, may contain limited financial and other details. Investors should remember that investing in self-directed IRAs involves risks, including fraudulent schemes, high fees, and volatile performance. Fees — The fees for self-managed IRAs can be significantly higher than those for other types of investment accounts. While the FDIC covers deposit accounts held within a traditional IRA or a Roth IRA with an FDIC-insured financial institution, not all IRA accounts fall into this category.
All IRA accounts are managed by custodian banks for investors, which may include banks, trust companies, or other entities approved by the Internal Revenue Service (IRS) as IRA custodian banks. Custodian banks for self-managed IRAs can allow investors to invest pension funds in “alternative assets such as real estate, precious metals and other commodities, crypto assets, private placement securities, promissory notes, and tax liens.” In addition, most custodian agreements between a self-managed IRA custodian and an investor explicitly state that the self-governing IRA custodian is not responsible for investment performance. DO NOT ASSESS the quality or legitimacy of investments in the self-governing IRA or its funders; and.
Complex tax rules — When you invest through a self-directed IRA, you must comply with complex IRS tax rules that don’t apply to other IRAs. A self-managed IRA is an IRA that is held by a custodian bank and allows investments in a wider range of assets than most IRA custodians allow. As mentioned above, self-governing IRA custodians do not generally verify the accuracy of the financial information provided in the account for an investment. No verification — With a self-directed IRA, you are solely responsible for evaluating and understanding the investments in the account.
For example, IRA investments in mutual funds, exchange traded funds (ETFs), or individual stocks are not covered.
