403(b)(7) Custodial Account - need some clarification

[HarleyBabe]

Need a little assistance in understanding this. Apparently client has no document but a Custodial Agreement for a 403(b)(7) account. They still need a document don't they? Thought all 403(b)s need docs now? No employer contribs just salary deferral. What makes a 403(b) different than a 403(b)(7)?

[ETA Consulting LLC]

"IF" the employer is a church, then they would not need a document. You are correct, though, that 403(b)(7) is reflective of the type of investment (e.g. brokerage account funded with mutual funds); and is still a 403(b).

Good Luck!

[Carol V. Calhoun]

The only difference between a 403(b) and a 403(b)(7) is that a regular 403(b) is invested in an annuity, while a 403(b)(7) is invested in a custodial account which in turn invests in a mutual fund. There are also some tax differences (e.g., penalties on excess contributions to a 403(b)(7), but not to a regular 403(b)). But otherwise, the requirements are the same.