An IRA trustee, also called a custodian, is the institution that manages your IRA. By law, every qualified retirement plan must have a custodian or trustee. A trustee can be a bank, credit union, financial institution, or trust company, such as IRA Financial Trust. The IRS maintains a list of entities approved, under Section 1.408-2 (e) of the Treasury Regulations, to act as trustees or non-bank custodians.
A modification is usually a change in the IRA agreement, in the plain language disclosure statement, or both. You may have noticed a wave of recent headlines related to “Fiduciary IRAs”, as many financial organizations have touted them as their latest and greatest IRA strategy. If the owner of the IRA performs adequate estate planning, there will be a power of attorney for this contingency. According to IRS Tax Resolution 78-406, a transfer is an unreportable movement of the assets of an IRA, since the owner of the IRA may not have control of the assets (that is, with a custodial IRA, all activity freezes when the owner of the IRA becomes incapacitated, until a guardian or attorney is appointed in fact files a power of attorney document.
In other words, a distribution of any IRA that is renewed later does not allow the renewal of any other IRA distribution made within a “one-year period”. Ironically, the fact that investment minimums (or absolute minimum fees) are so common in fiat IRAs means that they are unlikely to be cheaper than simply creating a standalone trust for a small account (in which the minimum trust IRA fee is paid), nor is a fiat IRA likely to be cheaper for a large account (where the trust writing fee is much lower) to pay ongoing trust management fees on a substantial asset base). For example, an administrator has the ability to assume full investment management of funds within managed IRAs and provide a wider range of financial advice to account holders. To determine the best way to decide what strategy is best for you, talk to an experienced estate planning attorney who listens carefully to your needs and wants, understands the complex financial and tax considerations associated with planning an IRA (and how to write and manage an IRA trust), has a thorough understanding of estate law, tax laws and strategies, and is willing to work with your other trusted advisors.
In addition to moving assets between “similar” IRAs via transfer, an IRA owner can move assets through the reinvestment process. Occasionally, the IRS issues regulations or other guidelines that do not affect IRS 5305 series documents, but do affect an IRA's plain-language disclosure statement. It is also possible for a brokerage firm to obtain a license from the Internal Revenue Service and offer IRAs to its customers. However, with a trust, the trustee may have the flexibility to distribute additional IRA amounts to the beneficiary, in case of medical emergencies, to help buy a home or other purposes that you approve.
The one-year account renewal rule takes into account all of a person's IRAs (traditional, Roth, SEP and SIMPLE) when determining eligibility.