Regarding the Safety of Your IRA or Other Cash

Updated September 21, 2023

uDirect IRA Services uses the custodial services of American Estate & Trust, LC. AE-Trust is a Nevada licensed, bonded and regulated trust company. Their regulatory supervision is under the Financial Institutions Division of Nevada, the state’s bank regulatory authority.

Any IRA with AE-Trust can be self directed, meaning you may direct your money into any investment you choose, and the variety of possible investments is huge. If you choose to self direct, the safety of your money is up to you since you have full control over the investment choice.

AE-Trust places all client cash in the AE-Trust Quick Access Fund (1) until or unless you direct that your money be invested elsewhere. This is an interest bearing fund, currently paying a .1% APY to IRA and other client accounts. A great number of our clients choose to leave some or all their IRA in this Fund, and it is the safety of this Fund which we address below.

Some of the Quick Access Fund is divided into multiple, FDIC backed-accounts at two banks, Wells Fargo and Bank of Nevada. Both have excellent financial stability and ratings. Some of the Fund is invested in money market funds (primarily Vanguard), some in government bonds, bond funds, other bank CDs (FDIC backed), bank notes, mutual funds and major corporation bonds. The main reason for the diversity of investments is to protect the Fund from the possible misfortunes of any one institution or investment which the Fund is invested in. In other words, we have spread the money over many different investments as a risk containment measure, similarly to that of most other investment funds.

Money market funds, such as the Vanguard fund mentioned above, can now also receive direct U.S. Treasury backing if they need it. This government fund backing is similar to FDIC insurance, but is not limited to $250,000 per account as bank accounts are. Money market funds are also federally regulated and their investments are limited to those of the highest quality and safety. The Vanguard money market fund AE-Trust relies on the most invests only in short-term direct government obligations, such as U.S. Treasury bills, which are backed by the full faith and credit of the U.S. government.

None of the Quick Access Fund is invested in a troubled institution or one that we deem to be at risk of failure. AE-Trust has never held real estate, mortgages, mortgaged backed securities or been involved in the sub-prime mortgage markets. Safety of principal is of utmost concern with the Fund. In addition, AE-Trust has its own state regulated capital reserves. Those reserves are all in cash in the two banks listed above. The reserves equal approximately 5% of the total client cash we hold in the Quick Access Fund.

As a final note, one of the terms of the Quick Access Fund is that it can take from 3 to 7 days for you to access money in the Fund. In actual practice AE-Trust routinely provides access within 24 hours, but there could be cases that access takes a few days longer. If you absolutely need overnight access to your money, please notify uDirect IRA Services, LLC by phone, fax, e-mail or on your new account application form and we will simply hold your funds in a non-interest bearing bank account (likely at Wells Fargo).

We are confident that client IRA and other cash in the AE-Trust Quick Access Fund (1) is held and invested with good standards of prudence and safety, and that only a system wide financial meltdown of extreme proportions would seriously deplete the value of Fund investments.

(1) Footnote:

An investment in the AE-Trust Quick Access Fund does involve risk.  AE-Trust is regulated by the Financial Institutions Division of the State of Nevada. But the Fund itself is not FDIC insured or guaranteed and is not regulated by the Securities Exchange Commission (SEC), though many of the investments held by the Fund are FDIC insured or U.S. Treasury backed. The safety of principal and the return of interest are guaranteed and backed only by the asset value of the Fund itself, and therefore backed only by the quality and performance of the underlying investments of the Fund. To minimize risk, funds are spread across, invested in, a large number of investments so that the poor results of any one investment, if any, should have a limited effect on the Fund. uDirect IRA Services, LLC and American Estate & Trust, LC assume no liability for losses in the underlying investments of the Fund, if any, though the company’s only means of compensation for on-going management and administration of the Fund is to maximize the safety of principal and the Fund’s yield.

Registrations, Permits & Licenses

American Estate & Trust holds the necessary registrations, permits and licenses to fulfill the requirements of the Nevada FID.

*  AET is a licensed, bonded and regulated trust company under the state laws of Nevada.

*  AET is licensed under Nev. Rev. Stat. 669

*  License Number:  TR10009

*  AET is a “qualified custodian” as defined in subsection (d)(6) of the custody Rule.

AET is a state of Nevada licensed trust company, meeting all state requirements for capital reserves and bonding. The company is regulated and examined by Nevada Financial Institutions Division (FID), which is the state’s financial institutions regulatory body.Background checks on AET principals are performed by FID.

As a trust company, AET must maintain minimum capital reserves and meet certain other stringent standards of honesty, competence and compliance with the law.

Privacy Policy: Client information is not disseminated to anyone outside our corporate offices, subsidiaries or affiliates, except in the normal course of providing services to you. No client information is available to unrelated parties. No client information is sold, rented, traded, etc. Client information may be obtained only by you or your authorized advisors, a proper court order, and/or a proper governmental demand.