What is compensation?
Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your net income for personal services performed for the business. All taxable alimony is considered compensation. Interest, dividends and most rental income are passive income and are not considered compensation.

Do I pay taxes on the earnings of my IRA?
All earnings on your IRA contributions (deductible and/or nondeductible) remain tax deferred until you make withdrawals from the account.

Do I get a tax deduction for my contribution?
Deductibility of your contribution is based on whether or not you or your spouse is an active participant in an employer-maintained retirement plan. If you are single and not an active participant, you are eligible for a full deduction no matter how large your income. If you are not an active participant, but your spouse is, you are still eligible for a full deduction if you file jointly and your combined Modified Adjusted Gross Income (MAGI) is below $150,000 or a partial deduction if your joint MAGI is between $150,000 and $160,000. If you are an active participant, the deductible amount is dependent on your Magi and income tax-filing status. You may be eligible for the maximum deduction, partial deduction or no deduction.

What if I am not eligible for a deductible IRA contribution?
You can still make nondeductible contributions to your IRA. You may also be eligible for a Roth IRA.

When can I withdraw funds from my IRA without incurring any IRS penalties?
You can withdraw funds from your IRA without the 10 percent IRS premature-distribution penalty any time after you reach age 59 ½. You can also avoid the premature-distribution penalty before age 59 ½ if you become disabled or die, if the distributions are part of certain periodic payments, for medical expenses in excess of 7.5 percent of your adjusted gross income, for health care insurance if you've been receiving unemployment compensation for at least 12 weeks, for qualified higher education expenses or for a first-time home purchase. When you reach age 70 1/2 , you must begin taking your minimum required distributions or severe penalties will be due.

How are the funds taxed at distribution?
If you are over age 59 ½, simply include the taxable portion of the amount withdrawn (generally, deductible contributions and all earnings) as income. However, if you are under age 59 ½ and do not meet one of the exceptions, you must also pay a 10 percent IRS penalty for premature distribution. The nondeductible portion of the distribution is not taxable when withdrawn nor is it subject to the 10 percent premature-distribution penalty.

What happens to my IRA in the event of my death?
Your named beneficiaries will receive the entire proceeds of the IRA. Your beneficiary(ies) will not be subject to the IRS 10 percent premature-distribution penalty. The manner in which your beneficiary(ies) receives the funds is determined by the election made by you or your beneficiary(ies) within the guidelines of the law.

What is a Spousal IRA?
The spousal IRA rules allow a married person to make an IRA contribution for his/her spouse. A married couple can contribute up to 100 percent of their combined earned incomes, or $4,000, whichever is less. The amounts can be divided in any manner between two IRAs, as long as no more than $2,000 is contributed to either IRA.

How do I move funds from one IRA to another?
There are two methods you can use to move funds from one IRA to another: rollover and transfer. For a rollover, you have 60 calendar days from the date of receipt to roll over the distribution to another IRA. Rollovers from IRAs may not occur more than once during a 12-month period (this rule applies to each separate IRA you own). A transfer occurs when the funds are moved from one IRA to another without you having control or custody of the funds. There are no time or frequency limits on the number of transfers permitted.

How do I move funds from a Qualified Plan (QP) or a Tax-Sheltered Annuity (TSA) to an IRA?
An eligible QP or TSA distribution may be a direct rollover or a rollover into an IRA. Generally, an eligible rollover distribution is any distribution except one that is 1) one of a series of substantially equal periodic payments over the single or joint life expectancy of the employee and beneficiary or for a specified period of 10 years or more, 2) a required distribution for a retired employee age 70 ½ or older, 3) a distribution of assets that have already been taxed and 4) a hardship distribution received after Dec. 31, 1998.

A rollover is a QP or TSA distribution that is issued directly to an IRA by the plan administrator (employer).

QP and TSA distributions paid directly to you are subject to a mandatory 20 percent federal income tax withholding at the time of distribution.

Funds moved to an IRA via a direct rollover are not subject to withholding.

As with an IRA-to-IRA rollover, a QP or TSA recipient has 60 calendar days from the date of receipt to roll over the taxable portion of the distribution to an IRA. The 12-month limitation does not apply to rollovers from a QP or TSA into an IRA.

When is the contribution deadline for funding an IRA?
IRAs for the taxable year can be opened and funded any time between the first day of your tax year and the date your tax return is due for the year, excluding extensions. This due date is normally April 15 of the following year.

How do I open an IRA?
Simply see any of our IRA representatives. We will explain the nature of these accounts in more detail and help you complete the simple forms necessary to establish your IRA.