Custodian Question

[Guest mrcharols]

I am wanting to set up a Roth and would like info on what the "custodian" actually amounts to. I have Scott Trade & Edward Jones accounts, have requested an app from Scot and received info from Legg Mason. What would be the differences in using a broker such as Scot or contributing directly to a fund family such as Legg. (Fees?) Also, can I change custodians at a later date? I am in my mid 50's and will probably work at least 10 more yrs. I'm in a tax-deferred 457 plan and want to start a Roth before April 15 so that my holding period will begin in 2004.

Info will be appreciated. (Including links or reference material.)

Mrcharols

[John G]

Custodian has a fiduciary duty to abide by IRS rules governing IRA/Roths such as involving reporting, distributions, contributions, etc.

Yes, you can change custodians at any time. Direct custodian to custodian transfer is the best approach and this entails filling out a new application with custodian #2, giving them your most recent statement from #1 and they take it from there.

Brokers vs funds vs electronic vs local office - - lots of choices and combinations. I would start with what format are you comfortable using.... not everyone likes the low cost internet options. The custodians options will also vary on: annual fees, minimums to open, internet access, types of investments available, commissions, etc. Most brokerages give you access to a reasonable number of no load funds. But, so do most fund families. If you plan to stick with mutual funds, you might be happy just to take your business to them. Some custodians emphasize "advice" or even active control of your account, others expect you to make all the decisions. Talk to a few potential custodians, ask questions. There may be 500 to 1000 choices for custodian and many will have combinations of features that will work for you.