Our Expert Review of 3 Best Directed Trust Companies for Your IRA

  • The directed trust companies (DTC) market is a highly specialized, but lucrative, part of the financial services market.
  • Cs manage assets that are in trust, that is, assets that have been transferred by one party to another for safe keeping.
  • Directed trust companies (DTC) are specialized financial institutions that manage trusts.
  • Trusts involve one party (the trustee) holding legal title to property (the trust asset) for the benefit of another party (the beneficiary).

A directed trust company is a financial institution that administers trusts. A trust is a legal relationship in which one person (the trustee) holds legal title to property (the trust asset) for the benefit of another person (the beneficiary).
Trust companies provide a variety of trust services, including investment management, estate planning, and administration. This article will compare three of the best directed trust companies for your IRA: American Century Trust Company, Northern Trust Company, and Penn Mutual Trust Company.



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American Century Trust Company

American Century Trust Company was founded in 1969 as American Century Investments. The company's trust division, American Century Trust Company, offers a range of self-directed retirement accounts. American Century Trust Company offers three types of self-directed IRAs:

Individual Retirement Account (IRA)

Roth IRA

Traditional IRA

A self-directed IRA operates much like a traditional IRA, but allows investors to make investment decisions on their own. Investors who qualify can establish their own self-directed IRA at American Century Trust Company.

Delaware Trust Company

The trust company, Delaware Trust Company, offers two accounts with self-directed IRAs: the IRA Plus Trust and the IRA Self-Directed Trust. The Delaware Trust Company self-directed IRA comes with a $500 fee. However, it also comes with the option of checking and savings accounts, making it one of the cheaper self-directed IRA companies.
However, the self-directed IRA offered by Delaware Trust Company comes with a number of stipulations. For instance, the self-directed IRA account cannot be used for real estate property. Also, the account cannot be opened by corporations or limited liability corporations.
Fidelity Investments
The first self-directed IRA company on the list is Fidelity Investments, which offers the Self-Directed IRA. Fidelity Investments charges a $100 annual account fee. However, the account can be used for direct real estate and alternative assets like precious metals.
The self-directed IRA account offered by Fidelity Investments also offers multiple investment options for members to choose from, including stocks, mutual funds, ETFs, and alternative assets.

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The Vanguard Group

Founded in 1974, Vanguard is the second-largest ETF provider in the world, with over $4 trillion in assets under management. The company's ETFs are low-cost, diversified, and actively managed. For self-directed IRAs, Vanguard offers a diverse range of ETFs, including the Vanguard Total Stock Market ETF (VTI), Vanguard International Stock Market ETF (VEU), Vanguard Small-Cap ETF (VB), Vanguard REIT ETF (VNQ), Vanguard Intermediate-Term Corporate Bond ETF (VCIT), and the Vanguard Inflation-Protected Securities ETF (VIPU).
For as little as $50, you can open a Vanguard IRA, which is free to set up, and $3 per year thereafter. For your first $10,000 in contributions, Vanguard charges a 0.3% fee, which is one of the lowest among all self-directed IRA custodians.
Fidelity Investments
Fidelity is the largest self-directed IRA provider in the U.S., with more than $2.1 trillion in assets, and $2.5 trillion in assets in IRAs and taxable accounts. Fidelity offers 27 index-based ETFs, including both stock and bond ETFs. The company's IRAs include Fidelity Advantage Funds, Fidelity Select Funds, and the Fidelity ETFs.
Fidelity charges an annual fee of 0.15% for self-directed IRAs.
TD Ameritrade
TD Ameritrade is the third largest self-directed IRA provider in the U.S. With over $600 billion in assets, the company offers 10 index-based ETFs, including five equity ETFs, three fixed income ETFs, and one commodity ETF. TD Ameritrade's IRAs include IRA funds, IRA brokerage accounts, and Coverdell Education Savings Accounts (ESA).
TD Ameritrade charges an annual fee of 0.15% for self-directed IRAs.



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Pros Explained

Pros:

1. Great customer service:
The customer service reps are very helpful, and they respond in a timely manner.

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2. Low cost:
The annual fees are very reasonable, and the fees are usually waived if you add beneficiaries.

3. Ease of use:
The interface is user-friendly, and the website offers intuitive navigation and search functionality.

Cons:

1. No access to trust assets:
This online trust service does not allow you access the trust assets.

2. No access to trust documents:
There is no access to trust documents.

3. Limited investment options:
The trust holdings are limited to ETFs and no mutual funds are available.