Bank Trust Custodial Account

DEFINITION of 'Bank Trust Custodial Account'

A type of Individual Retirement Account (IRA) allowed by the Employee Retirement Income Security Act of 1974 (ERISA) in which contributions are paid into the bank's interest-bearing financial instruments or a self-directed account. The difference between a self directed account and the bank's interest bearing financial instrument is that the investor is in charge of investment decisions. Self-directed accounts are usually set up by a brokerage and the investor is charged an amount above trading costs.

BREAKING DOWN 'Bank Trust Custodial Account'

ERISA is federal legislation enacted to ensure that pension/retirement plans of employers are fair and secure. It is the law that established rules and regulations to govern private pension plans, including vesting requirements, funding mechanisms, and general plan design and descriptions.

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RELATED FAQS
  1. What are the main advantages of a self-directed IRA?

    Learn about the way self-directed IRAs are handled by investors and the variety of options investors have to fund their retirement ... Read Answer >>
  2. What are the differences between a self-directed IRA and a traditional IRA?

    Explore the investment options available to and restrictions on account holders who choose a self-directed IRA as their retirement ... Read Answer >>
  3. Based on the Employment Retirement Income Security Act (ERISA), a retirement plan ...

    The correct answer is b. With regard to eligibility, the plan must cover all employees 21 and older who have worked for the ... Read Answer >>
  4. What is the difference between a custodian bank and a self-directed retirement account ...

    Learn about how an IRS-approved, self-directed retirement account custodian compares and contrasts with traditional custodian ... Read Answer >>
  5. Can I have a self-directed IRA or Roth IRA using the forex market?

    In the U.S., one of the best ways for individuals to protect their income from taxes and save for retirement is by using ... Read Answer >>
  6. Which of the following accounts does ERISA cover?

    A. IRA B. State employee pension planC. Corporate defined-benefit planD. Coverdell savings account Answer: CThe correct answer ... Read Answer >>
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