Note: We provide this for informational purposes only. We do not provide tax advice.

How do I transfer my IRA from another brokerage?

To transfer your existing IRA, you must first have an IRA account open with us. If you have an existing IRA account with us, you can initiate a transfer online. If you do not yet have an IRA account with us, you will need to open the same account type as the account you are transferring (example: a Roth IRA to a Roth IRA).

To transfer an IRA:

  1. Select the Transfer Account link on the Accounts page.
  2. Then follow the detailed instructions on the page.

How do I transfer a SEP IRA from another brokerage?

You have two options for transferring a SEP IRA:

  1. You can transfer your SEP IRA from another brokerage into a SEP IRA you open with us and your employer can continue to make contributions to that SEP IRA.
  2. You can transfer your SEP IRA from another brokerage into a traditional IRA with us. You may make contributions to this IRA, however, your employer cannot. So long as you do not make contributions, you will be eligible to transfer the holding back into a SEP IRA in the future.

To transfer an IRA:

  1. Select the Transfer Account link on the Accounts page.
  2. Then follow the instructions on the page.

How do I open a beneficiary IRA?

Beneficiary IRAs are only allowed to hold funds that come from a deceased person’s IRA or a retirement account on which you were listed as a beneficiary.

To open a beneficiary IRA:

  1. Open a rollover IRA account with us.
  2. Then submit a Beneficiary IRA Amendment Form.

How do I request a distribution from my IRA?

If you are over the age of 59½, you may withdraw funds from your account online by selecting Transfer Cash from the Accounts page. Then follow the detailed instructions on the page.

If you are not 59½, you must submit an IRA Distribution Request Form to withdraw funds.

To which year do my IRA contributions apply?

IRA contributions received between January 1 and December 31 are automatically credited as contributions for the calendar year in which the contribution is made, unless the contributions are received between January 1 and the federal income tax filing deadline (usually April 15th) and you notify us to apply the contribution to the prior year.

Note: If you are making a contribution by check, reference the contribution year in the memo line. Your envelope must be postmarked no later than the tax filing deadline. For electronic contributions (EFT, wire, or bill pay), send us an email (no later than the income tax filing deadline) with your account number, the date you made the electronic deposit, the dollar amount, and to which year it should apply.

How do I open an IRA for the prior tax year?

You can open an IRA for the prior tax year if the federal income tax filing deadline (usually April 15th) has not passed by opening the account on our website and designating your IRA contribution for the prior tax year.

Note: If you are funding an IRA with a check, your envelope must be post marked no later than the federal income tax filing deadline (usually April 15th).

How do I convert my account from a traditional IRA to a Roth IRA?

You may convert your account from a traditional IRA to a Roth IRA, or from a qualified retirement plan such as a 401(k) to a Roth IRA if you are eligible by submitting an IRA Distribution Request Form.

What is Form 1099-R?

Form 1099-R reports distributions of $10 or more from an IRA. This information is furnished to the IRS and must be included in your tax filings. Also reported are Roth conversions, recharacterizations and corrections of excess contributions made to your traditional, Roth, SEP, SIMPLE and beneficiary IRAs. Form 1099-R also includes any federal and state tax withholding amounts.

What is Form 5498?

Form 5498 reports the fair market value (FMV) of your IRA as of December 31st along with any reportable contributions. Reportable contributions include rollovers, contributions, Roth conversions, and recharacterizations made to your traditional, Roth, SEP, SIMPLE and beneficiary IRAs.

What is a recharacterization?

A recharacterization occurs when you contribute or convert funds into one IRA account type and later change the contribution or convert to another IRA account type.

An IRA recharacterization can apply to the following:

  • If you contributed money to your traditional IRA, you can recharacterize the contribution so that the funds count toward a Roth IRA contribution.
  • If you contributed money to a Roth IRA, you can recharacterize the contribution so that the funds count toward a traditional IRA contribution.
  • If you converted a traditional IRA to a Roth IRA, you can recharacterize the funds back into a traditional IRA.

Why would I recharacterize an IRA contribution?

  • Contribution Mistakes

    You might have made contributions for which you are not eligible. Recharacterizing the contribution allows you to correct the mistake and avoid undesired tax consequences.

  • Additional Tax Deductions

    If you contribute to a traditional IRA and later find out that it’s not tax-deductible, you can recharacterize the contribution to a Roth IRA. Likewise, if you contribute to a Roth IRA and later find out that you could have claimed a deduction for a traditional IRA, you may choose to recharacterize the contribution to a traditional IRA.

  • Higher Tax Bracket

    If you convert a traditional IRA to a Roth IRA, you will have to pay taxes on the amount contributed to the Roth IRA. If you discover that the conversion results in your being in a higher tax bracket, you might wish to recharacterize your IRA conversion. The IRA will effectively remain a traditional IRA and not contribute to your income.

  • Poor Investment Performance

    If you convert a traditional IRA to a Roth IRA, you will have to pay taxes on the amount converted to the Roth IRA even if the value of the Roth IRA declines. For example, you convert $50,000 to a Roth IRA and the value of the account falls to $25,000. You would still owe taxes on $50,000. To avoid this situation, you can recharacterize the $50,000 conversion back to your traditional IRA and not be subject to the tax on the original conversion to the Roth IRA.

How do I recharacterize an IRA contribution or conversion?

You can recharacterize an IRA contribution or conversion by submitting an IRA Distribution Request Form.

What is the deadline for recharacterization?

Recharacterizations of contributions or conversions must be completed within six months of the income tax filing deadline (generally October 15th, the automatic six-month extension if your income taxes are filed on time).

How do I request a partial recharacterization?

IRA holders can recharacterize all or part of a contribution or conversion by submitting an IRA Distribution Request Form.

What is an excess contribution?

An excess contribution is any amount contributed to your IRA that is greater than your annual maximum allowable contribution (the maximum amount is the lesser of your IRA contributions or your total taxable compensation for the year). Excess contributions can also occur for IRA holders age 70½ (and older) who make contributions to their IRA, invalid rollovers or failed Roth conversions.

For more information refer to Publication 590 at www.irs.gov.

IRA Contribution Limits for 2013

  • Traditional/IRA Rollover
    $5,500 ($6,500 if you are 50 years old or older)
  • Roth IRA
    $5,500 ($6,500 if you are 50 years old or older)
  • SIMPLE IRA
    $12,000 ($14,500 if you are 50 years old or older)
  • SEP IRA
    $51,000 ($51,550 if you are 50 years old or older)

IRA Contribution Limits 2012

  • Traditional/IRA Rollover
    $5,000 ($6,000 if you are 50 years old or older)
  • Roth IRA
    $5,000 ($6,000 if you are 50 years old or older)
  • SIMPLE IRA
    $11,500 ($14,000 if you are 50 years old or older)
  • SEP IRA
    $50,000

Are penalties assessed if excess contributions are not removed?

Yes. If excess contributions are not withdrawn by the income tax filing due date, including the automatic six-month extension if your taxes are filed on time.

How do I correct excess contributions?

You must withdraw the excess amount and any attributable earnings from your IRA by the income tax filing deadline, including the automatic six month extension. Attributable earnings may also be subject to an early withdrawal penalty.

To withdraw excess contributions—and avoid the penalty—select the excess contribution options on the IRA Distribution Request Form.

How are excess contributions distribution reported?

Excess contribution distributions are reported on Form 1099-R.

What if my excess contribution is withdrawn after the tax filing due date?

If the excess contribution distribution occurs after the income tax filing due date and applicable extensions, you will owe the penalty for that calendar year, and each year that the excess contribution(s) remain in your account.

What are the IRA distribution types?

  1. Normal Distribution

    Only for IRA account owners over the age of 59½.

  2. Premature Distribution without Exception

    For IRA account owners under the age of 59½. IRA penalties may apply.

  3. Substantially Equal Periodic Payments (SEPP/72t)

    Requested funds will be placed into an SEPP plan (waiving the IRA penalties for withdrawing funds from an IRA account before you are over the age of 59½), which will pay you annual distributions for five years or until you turn 59½, whichever happens last.

  4. Disability

    To make a disability distribution, a letter from your physician dated within the last 12 months verifying total disability or a Social Security Association (SSA) notice must be attached to the IRA Distribution Request Form.

  5. Excess Contribution

    Used for removing excess contributions and earnings before your tax filing deadline.

  6. Revocation of a Previously-Made Contribution to a New IRA Done within 7 Days

    Used to reverse a contribution made to a newly established IRA. We must receive a completed IRA Distribution Request Form within 7 days of the contribution that you would like to reverse.