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Difference Between IRA Custodian & IRA Trustee

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What is the difference between an IRA Custodian and an IRA Trustee?

An IRA custodian has "naked possession" of the assets; i.e., he/she/it does not have investment authority. The common example would be a bank whose IRA investments are limited to its own deposits.

An IRA trustee generally is empowered to make investment decisions. An example would be a bank trust department, where a large QRP has been rolled over into an IRA. The trustee may be empowered to buy and sell a wide array of investments within pre-established boundaries or at its own discretion. Oftentimes, the terms are not used with precision.

First published on 1/04/10

First published on 01/04/2010

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