Retirement
There are several individual retirement account (IRA) options available at Scottrade. Each one has slightly different benefits and tax advantages, so it's helpful to understand each one before deciding whether an IRA fits your investment plan.
The federal government has placed some investment restrictions on IRA accounts. Eligible investments include stocks, bonds, unit trusts, mutual funds and government securities. Some options trades such as selling covered calls and purchasing calls may be permitted in some types of accounts. For more information, please contact your local branch office.
Traditional IRA
Traditional Individual Retirement Accounts (IRAs) are available to investors between 18 and 70� years of age. There are no account minimums or fees, and earnings compound tax-deferred until they are withdrawn at age 59� or later. Individuals who are covered by a 401(k) or other employer-sponsored retirement plan are also eligible to contribute to an IRA.
Contributions are tax-deductible, and individuals may contribute up to $5,000 or 100% of their compensation, whichever is less. Those over age 50 may contribute an additional $1,000 of compensation each year.
Roth IRA
Roth Individual Retirement Accounts (IRAs) are available for investors age 18 and over who fall within Roth IRA income limits. There are no limits and no account fees when the accountholder receives statements and confirmations online.
Contributions are not tax-deductible, but because contributions are taken after taxes, no tax payments are required upon withdrawal. Individuals may contribute up to $5,000 or 100% of compensation, whichever is less, and those over 50 may contribute an additional $1,000 of compensation.
There is no age limit on when money must be withdrawn, and funds can be withdrawn tax- and penalty-free at age 59� provided the account has been open at least five years.
Rollover IRA
Rollover Individual Retirement Accounts (IRAs) allow you to move assets from a 401(k), 403(b), 457 or other employer-sponsored retirement plan to maintain tax-deferred growth without paying taxes or penalties. Generally, these accounts are set up by people who are leaving a job and do not want to lose the assets from their retirement account.
Rollover IRAs offer tax-deferred growth potential with no taxes or penalties, and no minimums or fees when the accountholder receives statements and confirmations online. There is also no mandatory federal withholding.
Additionally, if the investor wants to roll over the money into a different company retirement plan, that option is available.
SEP IRA
A Simplified Employee Pension (SEP) IRA is a retirement account for small business owners or individuals who are self-employed. Small business owners may also provide a SEP plan to employees, which may include employer contributions to employees' SEP IRA accounts. SEP IRAs offer tax-deferred growth potential with no account fees or minimums.
The maximum contribution per employee is 25% of compensation up to $49,000. Plan administration is not complicated, and employers may increase, decrease or skip annual contributions as necessary.
The material provided is for informational purposes only, and Scottrade is not responsible for any errors or omissions. Contribution and income limits are subject to change without notice. Please consult your tax or legal advisor(s) for questions concerning your personal tax or financial situation. The value of investments may fluctuate and securities, when sold, may be worth more or less than their original cost.
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