Individual Retirement Account (IRA)

Potentially reduce the taxes you owe today and grow your money tax-deferred

Meet the eligibility requirements and you can deduct contributions to a traditional IRA from your federal taxable income, as well as from your taxable income in most states. This up-front tax break reduces the current income taxes you owe. Also, money in a traditional IRA accumulates tax deferred. You’ll eventually have to pay taxes, but not until you make a withdrawal.

• You can contribute to your IRA any time during the year or by the due date for filing your tax return – always April 15 – extensions do not apply.
• If you make early withdrawals before age 59 1/2, you’ll owe a 10% tax penalty on the taxable portion of the distributions. You’ll also owe income tax on your earnings and on any deductible contributions you made.
• There are exceptions to the early withdrawal penalties: you have unreimbursed medical expenses exceeding 7.5% of your adjusted gross income, have health insurance premiums due to unemployment, are permanently disabled, have qualified higher education expenses, are a first-time homebuyer (lifetime limit of $10,000), or are the beneficiary of a deceased IRA owner.
• By April 1 of the year following the year in which you reach age 72, you must either withdraw your entire balance or start taking required minimum distributions each year. 

Ready to get started? We're here to help:

find an advisor

Earnings grow tax-deferred, withdraw at retirement tax-free

Roth IRA earnings grow tax-deferred, and for qualified distributions, your earnings can also be withdrawn tax-free. But there are rules, and they can be complex:

• Roth IRA contribution limits vary by tax year, income level and tax filing status (single, married filing jointly), so you may want to work closely with a financial professional.
• You can contribute to your IRA any time during the year or by the due date for filing your tax return – always April 15 – extensions do not apply.
• If you need to dip into your nest egg early, Roth rules differ and can be complex. Unlike a traditional IRA, you can withdraw up to the total amount of your annual contributions at any time, for any reason, with no federal taxes or penalties due.
• Another advantage Roth IRAs have over traditional IRAs is there are no required minimum distributions during an owner’s lifetime. Minimum distribution rules, however, do apply after the death of the owner. 

Ready to get started? We're here to help:

find an advisor

Your existing retirement funds follow you penalty-free

When you close or take money out of a retirement account before the IRA guidelines allow it, you typically have to pay the ordinary income tax on it, plus an early withdrawal penalty. But there’s a simple way to transfer the money into another qualified plan. And it doesn’t trigger any taxes or penalties at all.

• A “direct rollover” moves an employer retirement plan like a 401(k) or 403(b) plan directly into another IRA.
• A “trustee-to-trustee transfer” is a direct rollover where your IRA savings are rolled into another IRA with a new trustee.
• With an “indirect rollover,” you receive a distribution from the IRA or tax-deferred plan and then roll it into another retirement plan or to an IRA. You must do this within 60 days. After that date, taxes will be due and depending on your age, an additional 10% tax penalty may be assessed.
  • Indirect rollovers can force withholding. If your money is in an employer retirement plan, your employer is typically required to deduct 20% withholding. You recover it by rolling over 100% of your distribution and adding the 20% back in yourself. 

Ready to get started? We're here to help:

find an advisor

What happens if your IRA outlives you?

Your IRA assets pass to your beneficiaries, the individuals you’ve named to receive them. When they do, they receive an “Inherited IRA.” 

• Rules for inherited IRAs vary depending on the type of beneficiary you name.
• Spouse beneficiaries have options for an inherited IRA that aren't available to other types of beneficiaries.
• Most non-spouse beneficiaries will need to liquidate an inherited IRA within a 10-year period.
• Some beneficiaries, known as Eligible Designated Beneficiaries, can stretch distributions over their own lifetime. 

We're here to help:

find an advisor