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April 18, 2009


Your Guide

The definition of a trustee depends on the capacity in which the party is serving. Trustee includes :
  • Banks and trust companies serving as trustees for IRAs, in the capacity of a Custodian (upper case C-Custodian) . In such a capacity, the trustee is responsible for perform certain tax reporting and accounting for the IRA
  • Individuals or entities serving as a trustee for a qualified plan. In such cases, the plan document usually defines the duties of the trustee, which can be separate from those for which a Custodian is responsible. Such duties can include:
    • Providing important information necessary for the plan administrator to effectively perform his duties
    • Processing distributions to plan participants and beneficiaries
    • Maintaining record-keeping on contributions, distributions, loans, rollovers and earnings for participants
  • Individuals or entities serving as trustees for trusts, other than retirement accounts. The trusts would define the duties of the trustee. In some cases, the trustee’s duties are also defined by state law.
Trustee is sometimes used interchangeably with  custodian, when referring to IRAs
Referring Cite
IRC § 408(n)
Additional Helpful Information
  • A trustee can be a discretionary trustee, a directed trustee or serve as both. In cases where a trustee serves as both a directed trustee and a discretionary trustee, the trust or plan document would define the instances in which the discretionary and directed roles would apply.
  • The terms of the trust agreement should provide for a party to be a successor trustee, in the event the trustee is unable to perform its duties  

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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