Quick Answer
Account opening ties three duties together: collect required customer information, verify identity under a written Customer Identification Program, and apply Know Your Customer diligence for essential facts and authority. Records follow separate retention clocks. Retirement accounts add 2026 individual retirement account (IRA) contribution limits, required minimum distributions, and rollover rules. Disclosures match the product, not the account.
The whole unit on one sheet: opening authority, ongoing maintenance, and the disclosures and retirement rules tied to specific products.
Which One-Liners Win Points?
- Account type, registration, and prime brokerage answer different questions. A corporate registration alone does not prove institutional status.
- An institutional customer needs at least $50 million in total assets, plus specified financial institutions and registered investment advisers.
- Collection generally happens before opening; verification can happen before or after, within a reasonable time. A firm may open an account for a customer who applied for a taxpayer number before opening.
- Entity beneficial-owner information is a last resort, used only when documentary and non-documentary methods fail to verify the entity's true identity.
- Account acceptance and transaction authority are separate records. A partner, officer, or manager signs for acceptance; the entity account separately names each authorized person.
- Maintain and preserve are not synonyms. Maintain is current or in-use information; preserve is information no longer current or in use.
- A required minimum distribution can never become a rollover. The required amount must leave the account first.
- Illiquidity does not pick the disclosure by itself. Identify the actual product, then match it to its own required document.
Which Numbers Matter Most?
| Item | Value |
|---|---|
| Institutional customer threshold | at least $50 million in total assets |
| Identity records | 5 years (two clocks: account closes, or record made) |
| Updated account information | preserved 6 years after the update |
| Final or original account information | preserved 6 years after the account closes |
| Existing outside account, after association | consent and written notice within 30 calendar days |
| Customer-received IRA rollover | normally due by the 60th day after receipt |
| 2026 traditional and Roth IRA limit | $7,500, plus $1,100 catch-up at 50+ |
| 2026 SEP IRA employer contribution | lesser of 25% of compensation or $72,000 |
| 2026 SIMPLE IRA employee deferral | generally $17,000, plus $4,000 catch-up at 50+ |
| 2026 401(k), 403(b), 457(b) deferral | $24,500, plus $8,000 catch-up at 50+ (457(b) catch-up is for a governmental plan) |
How Do Transfers, Rollovers, and Required Distributions Differ?
- Trustee-to-trustee transfer: assets move custodian to custodian; the customer never receives them, and the one-per-year limit does not apply.
- Direct rollover from an employer plan: the plan sends the distribution straight to the customer's chosen plan; the customer never receives it, and the one-per-year limit does not apply.
- Customer-received IRA rollover: the IRA pays the customer, who must redeposit within 60 days, subject to limited exceptions. Only one tax-free IRA-to-IRA rollover is allowed per year, across the customer's IRAs.
- Required minimum distributions apply to traditional IRAs, traditional SEP and SIMPLE IRAs, and employer plans, but not to a Roth IRA, including Roth SEP and SIMPLE forms, before the original owner's death.
Which Gotchas Trip Students Up?
- A product label does not set a prospectus deadline. Match a mutual fund with its prospectus; separate sale or distribution conditions set the deadline.
- The options disclosure document is tied to account approval, not a holding. Deliver the current document at or before the account is approved for options trading.
- Escheatment has no nationwide deadline. State law supplies the dormancy period, deadline, and remittance process, after the firm attempts to contact the owner.
- A new covered outside account needs consent and notice before it opens. An account that predates the association gets 30 calendar days instead.
- Failed identity verification does not automatically close the account. Written procedures cover refusing to open, transacting during verification, closing after failed attempts, and filing a Suspicious Activity Report.
- Standing settlement instructions only handle settlement. They do not establish identity, prove authority, or replace the account acceptance signature.
One-Breath Recap
Account opening rests on three duties that never merge: collect the required customer information, verify identity under a written Customer Identification Program within a reasonable time before or after opening, and apply Know Your Customer diligence to the essential facts and the authority behind every account. Retention runs on separate clocks, five years for identity records measured from closure or the record, and six years for account information measured from update or closure. Maintenance keeps that information current, resolves failed verification through written procedures, and sends dormant property to the state only after the firm tries to reach the owner. Retirement accounts add their own rules: 2026 contribution limits, required minimum distributions that skip the Roth, and a 60-day, once-per-year clock on a customer-received IRA rollover. Match every disclosure to its product, not to the account.
Need more than the recap? Read the full Account Opening and Maintenance unit.