An IRA administrator oversees the administration of Individual Retirement Accounts, ensuring compliance with IRS regulations. Banks, credit unions, and brokerage firms can function as trustees, providing periodic reports to account holders. IRA administrators offer additional financial options compared to IRA custodians. When opening an IRA, researching the administrator is important, including reading consumer reviews and contacting agencies like the Better Business Bureau.
An IRA administrator is an entity that oversees the administration of an Individual Retirement Account, a form of retirement plan that is available in the United States. Trustees are responsible for keeping the plan in compliance with regulations issued by the Internal Revenue Service, or IRS. To function as a trustee, the entity must be licensed by the IRS and maintain standards set by that agency.
Several different types of business entities can function as an IRA administrator. Banks often offer retirement plans of this type and take over the administration of the plans entrusted to their care. Credit unions and savings and loan associations can also function as trustees, following the same rules and regulations that are required of banks. A brokerage firm may also be licensed by the Internal Revenue Service and offer IRAs to its clients.
As part of the administration of the accounts, the IRA administrator must be able to process any purchase requests submitted by the account holders. Federal regulations also require the administrator to provide periodic reports to account holders that contain a type of activity that affects the IRA balance. This would include any contributions made to the account in the period covered by the report, as well as any disbursements that may have occurred. If deductions are made for tax purposes, they are also noted. All reports include data such as the date each transaction occurred, the type of transaction, the amount of the transaction, and the adjusted balance after the transaction is applied.
There is some confusion regarding the difference between an IRA administrator and an IRA custodian. Although many people use the two terms interchangeably, the trustee is able to offer additional financial options to anyone who wants to open an IRA. For example, a manager has the ability to take full management of investing funds within managed IRAs and offer a broader range of financial advice to account holders. An IRA custodian is restricted from offering these additional services and support.
When opening a new individual retirement account, it’s a good idea to research the IRA administrator who will be involved with the account. This means reading consumer reviews of the servicer, contacting agencies like the Better Business Bureau to see what kinds of complaints have been filed against the servicer, and how those complaints are resolved. Because it is possible to set up this type of account online, consumers do not always have the option of visiting the servicer at a physical location to get a personal idea of how the servicer does business. For this reason, many people prefer to work with trustees who have physical locations, then use online methods to monitor account activity.
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