PENSCO Security & Protection

Why it is important to choose a regulated institution to custody your IRA.

PENSCO Trust Company recognizes the importance of financial and personal integrity to our clients. Over our twenty-year history, we have endeavored to develop and maintain the systems, controls, and personnel necessary to perform our duties and responsibilities to our clients in a safe and sound manner.

As the first independent (e.g. start-up) company ever approved by the Internal Revenue Service as a non-bank custodian, PENSCO Trust Company had to prove to the IRS that it had the wherewithal, knowledge and experienced staff to conduct a retirement services business. Similar submissions, review, and approval processes took place when the Company applied to the Banking Commissioner of New Hampshire to establish a trust company in 2001. Each of these financial regulators conducted an extensive review of our organization and track record prior to accepting responsibility for our company as its regulator.

The duties of the regulators vary somewhat between organizations and entity types. However, there are many duties that they have in common, including ensuring:

  • The financial stability of each institution they regulate
  • The safety of customer funds
  • That each company has the appropriate financial controls, procedures, personnel and policies, so as to reduce the likelihood of errors, fraud, etc.
  • That each institution meets the requirement of all pertinent rules and federal and state regulations that apply to its type of institution

Regulators take their responsibilities seriously. This is not only because it is their duty to the public, but also because they are responsible to step in if necessary, should an institution not meet its responsibilities. As a result, they typically require monthly reporting from each institution under their purview, and they typically conduct annual audits. Such audits are in addition to the required audit of the company's books, records, financial controls, etc., by the institution's external auditing firm. All of these procedures are designed to prevent and/or detect major risks or problems before they become serious. Regulators typically require detailed plans to resolve any outstanding problems, and will also review the results of such resolution.

We feel that the organization you choose to hold your IRA should be regulated and be in good standing. Some organizations offering IRA services are not directly supervised by a federal or state regulator. These organizations appoint a bank to act as their nominal custodian or trustee (to fulfill the legal requirement to offer IRA services). However, typically, the "administrator" (as such firms are called) does much or all of the processing and record-keeping. The risk is that there is no regulator supervising and reviewing the procedures, controls and processing of these administrators. In some cases, such firms have ultimately gotten into serious difficulty, gone out of business or been guilty of outright fraud and theft of client funds. So be sure to check out the legal authority of any custodian/trustee with whom you may do business.


PENSCO Trust Company, as a regulated institution, is required to maintain certain insurance policies. These policies include fidelity insurance (for employee theft, fraud and dishonesty), generally called a "banker's blanket bond"; an E & O (errors and omissions) bond; a D & O (Director's and Officer's) policy; a general liability insurance (for loss of premises or other assets, etc.), and a workman's compensation insurance policy for its employees. In addition, a company may maintain additional insurance or increase the amount of coverage on any of the required policies at its own discretion. Regulators require periodic evidence that these policies are in effect and at the appropriate levels for the size and type of business involved.

Client cash

Because PENSCO Trust Company is a non-depository trust company, all cash that PENSCO Trust Company clients deposit with PENSCO Trust Company is deposited daily into a "Cash Reserve" account (CRA) which is held at banks that PENSCO Trust Company chooses. This account is an interest bearing savings account that is FDIC insured up to $250,000, as standard for all banks for self-directed retirement accounts. This means that if one of PENSCO Trust Company's depository banks should fail for any reason, the Federal Deposit Insurance Corporation would ensure that all affected clients would receive their cash balances up to $250,000 per total deposits per accountholder per institution. Because PENSCO Trust Company utilizes multiple depository banks, clients may receive in excess of the $250,000 coverage depending on their total deposit value.

PENSCO Trust Company only uses depository banks with an FDIC rating of either "adequately" or "well" capitalized. The bank ratings are monitored regularly and reported quarterly to the Board members.

Track record

PENSCO Trust Company is proud of its track record for leadership and performance in the retirement industry. PENSCO Trust Company's mission is to maintain the highest level of integrity, honesty, knowledge, and client service in its industry.

PENSCO Trust Company has the distinction of having been consistently on the Greater Bay Area's Better Business Bureau's Honor Roll for complaint-free operations over its history. PENSCO Trust Company has been given one of the BBB's highest ratings (A+).

We pride ourselves on the execution of all properly authorized transactions in a timely fashion. PENSCO Trust Company has been promising and delivering 48-hour funding, and with no extra charge, for the past 20 years, while some of our competitors still charge "expediting" fees for processing within 72 hours.

PENSCO Trust Company was the first alternative custodian in its industry on the Internet, and the first to allow clients to view their account information through our secure website.

PENSCO Trust prides itself on being responsive to client inquiries, and on the fair resolution of client complaints. Our management is available to respond to priority concerns, or client needs in regards to their retirement accounts at PENSCO.