Two different groups that help manage an IRA are called “Supervisors” or “Trustee.” According to IRS Publication 590, both a trustee and a supervisor “must be a bank, a federally insured credit union, a savings and lending association, or an IRS-approved organization to act as a trustee or supervisor.” In addition, neither organization in most cases can accept contributions that exceed the annual IRA deduction.
While for most people there is little difference between an IRA supervisor and a trustee, Tom Anderson, CEO and Founder of PENSCO Trust Company, says that one key difference is that the trustee can take over the entire investment management of the IRA and give financial advice. A watching man no.
There are several types of IRAs such as gold IRAs, Roths, and SEP. As Anderson explains, a trustee can review your specific financial situation and give you guidance on what’s best for you.
Other financial sources
Trustees must be knowledgeable about CDs, stocks, bonds, and currency market accounts in order to be able to offer multiple investment paths. Supervisors are not necessarily knowledgeable about these financial areas and often cannot give financial advice. Financial resources such as Canandaigua National Bank and trust have clear differences between the two positions.
Bank or investment company
Anderson says guardians are primarily tasked with the administrative and operational support of your IRA. Most banks function as supervisors. Investment firms and other financial institutions act as trustees, although most large financial institutions will offer both services.
Required / Optional
As stated by uslegal.com, a reputable legal resource website, IRAs, whether they are SIMPLE, SEP, Roth, or traditional, require a supervisor. A trustee is optional.