What is the difference between a custodian and a facilitator?

What is the difference between a custodian and a facilitator?

A custodian is the regulated financial institution that holds your IRA and reports to the IRS.

A facilitator is a service provider like Self-Directed Plans LLC that helps you establish the legal structures (LLC or trust) for checkbook control.

The custodian holds your IRA; the facilitator builds the investment vehicle that supercharges that IRA.

How their roles compare

Function Custodian Facilitator (Self-Directed Plans)
Regulatory Status Regulated bank/trust company Document service provider
Holds Your Funds Yes (IRA account) No
IRS Reporting Files Form 5498 annually No IRS reporting role
Access to Money Direct access to IRA funds Never touches your money
Role in Investments Processes IRA-layer events; signs docs in custodian-directed accounts Creates entity structure for checkbook control
Provides Required IRA custody Legal documents, entity setup, implementation guidance

What does the custodian do?

The custodian is a financial institution chartered and regulated by state banking authorities to hold retirement accounts.

IRC Section 408 requires every IRA to have a qualified custodian. This isn't optional.

The custodian handles IRA-layer events including new contributions, distributions, rollovers between accounts.

They also record your account beneficiaries and file Form 5498 with the IRS each year reporting your account value and any contributions.

A custodian can be used to process investment transactions, but that involves paperwork processing delays, and transaction fees.  In a checkbook control IRA, the custodian makes a single investment into the LLC or Trust that you then use to make all plan investments.  This dramatically reduces the role of the custodian.

What does a facilitator do?

Self-Directed Plans LLC is a facilitator, the glue that brings checkbook control structures together.

We provide the specialized legal documents that enable direct control: operating agreements for LLCs, trust agreements for trusts, Solo 401(k) plan documents.

We handle entity formation: filing Articles of Organization with the state for LLCs, obtaining EINs, and preparing the documents you need to open bank accounts.

We coordinate the custodial IRA setup, guide you through opening the entity's bank account, and ensure you understand how to operate the structure compliantly.

Custodians don't typically provide these services for regulatory reasons. To remain a "passive" custodian and avoid being viewed as a fiduciary with investment authority, they stay out of legal entity formation and investment structuring.

That's where facilitators like us come in.

What we don't do: hold your money, make investment decisions for you, or have any access to your funds.

We're not a custodian, trustee, administrator, or fiduciary. We don't provide tax, legal, or investment advice. We build the vehicle; you drive it.

Frequently Asked Questions

  • Does Self-Directed Plans LLC ever have access to my IRA funds?
    No. Self-Directed Plans LLC never has access to or control of your retirement funds. We're a document service and facilitator. Your IRA is held by a regulated custodian, and your LLC or trust bank account is wholly under your control.
  • Who is the custodian for Self-Directed Plans clients?
    We work exclusively with IRA Resources, a qualified IRA custodian licensed by the South Dakota Division of Banking. IRA Resources has been serving self-directed investors for 30 years. We chose them because they're proven, offer excellent service and support, and provide competitive fees for account administration. This partnership ensures seamless coordination between your IRA custody and the checkbook control structure.
  • Can I use a different custodian with Self-Directed Plans?
    No. Our services and systems are built to coordinate specifically with IRA Resources. Having a single custodian to integrate with streamlines our operations, allows us to provide better support for your entire plan, and is a key part of keeping our fees low. If you have an IRA with another custodian and want to work with us, we can help you transfer your account to IRA Resources as part of the setup process.
  • Why do I need both a custodian and a facilitator?
    You need a custodian because the IRS requires it for all IRAs under IRC Section 408. You need a facilitator to add checkbook control to that IRA. We handle the entity formation and implementation; they handle the IRA custody and reporting.
  • What happens if Self-Directed Plans goes out of business?
    Your retirement funds would be completely unaffected. Your IRA is held by IRA Resources, not by us. Your LLC or trust is a legal entity you control with its own bank account. We provided the documents to establish the structure, but the structure itself exists independently. You could continue operating your plan exactly as before.

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Disclosure

This information is provided for educational purposes only and should not be interpreted as tax, legal, or investment advice. Readers are encouraged to consult a qualified professional who can offer guidance based on their personal situation.

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