Frequently Asked Questions (FAQs) | Schwab - Millennium Trust Company
Frequently Asked Questions

Quick answers to your most immediate questions

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  • What is a self-directed IRA?

    A self-directed IRA is just like other Individual Retirement Accounts in that it provides a way for individuals to save for retirement in a tax-deferred account. The term "self-directed" became popular because the account owner has the freedom to invest in a wide range of investment options, including both alternative and traditional assets.

  • What is an alternative investment?

    An alternative investment is any asset that is not publicly traded. Examples of alternative investments include: hedge funds, private equity or debt, real estate and precious metals, among others.

  • Why do I need a specialized custodian such as Millennium Trust?

    In 1974 Congress authorized the use of Individual Retirement Accounts (IRAs) to help Americans save for retirement. Under this rule, they stipulated an IRA must be held with a qualified custodian — traditionally a bank, brokerage firm or trust company. While perhaps the majority of IRA owners have opted to hold traditional investments (stocks, bonds, mutual funds), alternative assets can also be held in IRAs. Few custodians are willing to handle such assets due to the complexity of these investments. Millennium Trust Company is an expert in this area and currently custodies over 11,000 unique alternative assets.

  • What do you do as custodian?

    At its most basic, we hold assets in an account on behalf of the owner. The account owner (or their authorized agent) is responsible for directing all investment/account activity. At their direction, we purchase/sell assets, as well as transfer or distribute assets from the account. As part of our role as custodian we also provide required account statements and tax reporting. For additional information, please refer to the Retirement Income Trust Association (RITA) document, Understanding the Role of a Directed IRA Custodian.

  • How do I protect the tax-deferred status of my Millennium Trust IRA?

    There are a number of issues that may put the tax-deferred status of your IRA in jeopardy. As a general rule, Millennium Trust must directly handle the flow of funds to and from any investments on behalf of the IRA and all contributions and distributions must be processed between the account owner and Millennium Trust. Certain other Prohibited Transactions can also result in negative tax consequences if engaged in. It is important to always consult with your investment, tax and legal professionals before directing any investment activity. See IRS Publication 590A for rules related to Prohibited Transactions.