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Does a custodial account need to have a trustee?


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It has been proposed that our client, a government plan, enter into a custodial account and recordkeeping agreement in order to permit the participants to invest in mutual funds. (The plan's assets are currently held under 401(f) contracts.) The custodial account calls for a trustee. We have been advised by the custodian, however, that a trustee is not required. We are a little confused as to how the custodial account could function properly without a trustee.

If there is no trustee, in whose name would the plan assets stand? Would the Plan Administrator stand in the shoes of the trustee and instruct the custodian? Is anyone aware of an arrangement such as this and, if so, are there any disadvantages to this type of arrangement?

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