An Individual Retirement Account (IRA) is an investment tool created by the U.S. government to supplement retirement income. IRAs are generally available to anyone who receives taxable earned income throughout the year. IRS Publication 590 provides information on determining what types of earned income are considered taxable. Reference the IRA type you are interested in for specific rules that may apply. Please contact your tax professional for assistance in determining the type of IRA that will best suit your needs.

▲Top

Account types

Traditional IRA

Individuals can set up their own accounts for retirement through Individual Retirement Accounts (IRAs).
Income your account may earn is tax deferred while it is in the account.
If you are under age 70½ and have earned income or a spouse with qualifying earned income, you may each contribute up to $5,000 a year (for 2009) that may be tax deferred. Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), there may be increases in $500 increments beginning in 2009. Individuals who attain the age of 50 before the close of the taxable year may contribute an amount in excess of the basic annual IRA contribution limit as follows: 2006 and beyond, $1,000. Consult your tax professional to determine if contributions are tax-deductible.
The deadline for making a contribution is usually April 15 of the year following the desired contribution year (excluding extensions).
Taxable distributions may be taken without penalty starting at age 59½ and must be started by April 1 once you have reached 70½.
Transfers may be made to this account from Traditional, Rollover, SEP or SIMPLE IRAs, or a qualified retirement plan (401(k), 403(b), etc.). SIMPLE IRA transfers must meet the two-year rule.
We require the account owner to be of legal age in his or her state of residence.
You cannot pay for commission fees or subscription fees outside of the IRA. We will also not accept funds for commission-fee or subscription-fee payments into the IRA in excess of the maximum annual contribution.

To open this account, please complete a Traditional IRA application.

▲Top

Rollover IRA

A Rollover IRA is an account designed to hold funds from a qualified retirement plan, such as a 401(k), 401(a), 403(b), ESOP, Keogh, profit sharing plan or defined benefit plan.
Moving funds into a Rollover IRA may allow you to return the funds to another qualified retirement plan in the future.
If you've met one of the qualifying events as outlined in IRS regulations, you may be able to move your current qualified retirement plans into a Rollover IRA at TD AMERITRADE.
With a Rollover IRA at TD AMERITRADE, you can consolidate several qualified retirement plans into one account, which makes managing and monitoring your money easier. TD AMERITRADE also offers a wide range of investment options to help you reach your individual investment goals.
To open this IRA, TD AMERITRADE requires you to be of legal age in your state of residency.
You cannot pay for commission fees or subscription fees outside of the IRA.
It generally takes 30 to 90 days after all the necessary and completed paperwork is received to complete a direct rollover. The actual time frame is dependent on the plan administrator’s processing time, so please contact your plan administrator for details.
Transfers from a qualified retirement plan are typically completed by following instructions from the administrator of the plan. You may not need to complete a TD AMERITRADE Account Transfer Form. Please check with your plan administrator to learn more about their procedures and your eligibility for removing funds from the plan.
Rollover IRAs held at another institution can be directly transferred into a Rollover IRA at TD AMERITRADE by completing the TD AMERITRADE External Account Transfer Form.

In all other cases, please complete an Online Account Application.

▲Top

Roth IRA

The principal difference between the Roth and a Traditional IRA is this: while contributions to a Traditional IRA are tax-deductible (except in certain cases) and withdrawals are taxed, contributions to a Roth IRA are taxed, but qualified withdrawals are not subject to federal tax.
Any earnings of your Roth IRA are tax-free while they accumulate.
If your Roth IRA has been established for five years, you may take a qualified distribution for one of the following reasons: you are 59½, you are disabled and have provided proof of this, or you are using the funds for the first-time purchase of a home, up to $10,000.
Regardless of your age, you may contribute up to $5,000 a year (for 2009), depending on your earned income or that of your spouse. Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the following contribution limit increases go into effect: 2008 and beyond, $5,000, plus potential increases in $500 increments beginning in 2009. Individuals who attain the age of 50 before the close of the taxable year may contribute an amount in excess of the basic annual IRA contribution limit as follows: 2006 and beyond, $1,000. To determine your maximum contribution, consult your tax advisor.
Contributions are not tax-deductible; however, qualified withdrawals are federal tax-free.
Transfers may be made to this account from another Roth IRA, or funds may be "converted" from a Traditional IRA.
The deadline for making a contribution is usually April 15 of the year following the desired contribution year (excluding extensions).
We require the account owner to be of legal age in his or her state of residence.
You cannot pay for commission fees or subscription fees outside of the IRA. We will also not accept funds for commission-fee or subscription-fee payments into the IRA in excess of the maximum annual contribution.

You may wish to contact a tax professional regarding contribution eligibility and/or distribution qualifications.

To open this account, please complete a Roth IRA application.

▲Top

Simplified Employee Pension (SEP) IRA

SEP IRAs were created for self-employed individuals and smaller companies. Employers can make tax-deductible contributions to SEP IRAs for eligible employees. For more information regarding eligibility, reference IRS Publication 590 or IRS Publication 560.
SEP contributions are limited to 25% of your annual income, not to exceed $49,000 for 2009. Effective for years beginning on or after January 1, 2002, as a result of EGTRRA, the maximum amount of compensation that may be taken into account for various plan purposes is raised to $230,000, with potential increases thereafter in $5,000 increments.
Each year, the IRS sets a limit on the total compensation amount that your employer can consider.
Transfers may be made to this account from Traditional, Rollover, SEP or SIMPLE IRAs and qualified retirement plans (401(k), 403(b), etc.). SIMPLE IRAs must meet the two-year rule.
The deadline for making a contribution is the company tax filing deadline of the year following the desired contribution year (excluding extensions).
The deadline for making personal contributions is April 15th of the year following the desired contribution year.
We require the account owner to be of legal age in his or her state of residence.
You cannot pay for commission fees or subscription fees outside the IRA. We will also not accept funds for commission-fee or subscription-fee payments into the IRA in excess of the maximum annual contribution.
Form 5305-SEP is required to open a SEP IRA.

To open this account, please complete a Simplified Employee Pension (SEP) IRA application.

▲Top

Savings Incentive Match Plan for Employees (SIMPLE) IRA

An employer-run savings plan that is in the form of an IRA, featuring employee tax-deferred contributions and matching contributions by the employer. Employers having 100 eligible employees or less and who do not maintain another retirement plan are eligible to establish a SIMPLE IRA. For more information on eligible employees, reference IRS Publication 590 or IRS Publication 560.
The employer makes all contributions and is limited to $10,500 in employee-elected deferrals, and $10,500 in employer-matching contributions per year. Under EGTRRA, the following elective deferrals increases have gone or will go into effect: 2006 and beyond, $10,000, plus potential increases in $500 increments beginning in 2006.
The employer has the choice of either matching the employee's deferrals (up to 3% of the gross salary) or making non-elective contributions (2% or less) to ALL eligible employees regardless of the employee's participation.
Transfers may be made to this account from another SIMPLE IRA only.
The deadline for making a contribution is usually April 15 of the year following the desired contribution year (excluding extensions). For a previous year contribution, the SIMPLE IRA must have been established by October 1 of the year for which the contribution is being made.
You cannot pay for commission fees or subscription fees outside of the IRA. We will also not accept funds for commission-fee or subscription-fee payments into the IRA in excess of the maximum annual contribution.
Form 5305-SA is required to open a SIMPLE IRA.

Form 5305-SIMPLE allows the employer to designate the financial institution where all participants must establish their SIMPLE IRA. Form 5304-SIMPLE allows employees to choose where they want to establish the SIMPLE IRA.

To open this account, please complete a Savings Incentive Match Plan for Employees (SIMPLE) IRA application. Form 5305-SIMPLE or form 5304-SIMPLE will also be needed to open the account.

▲Top

Are there legal age requirements?

The following table lists the age of majority in each state or U.S. territory in order for an individual to be a legal account owner.

Jurisdiction	Age of Majority
Alabama	19
Alaska	18
Arizona	18
Arkansas	18
California	18
Colorado	18
Connecticut	18
Delaware	18
District of Columbia	18
Florida	18
Georgia	18
Hawaii	18
Idaho	18
Illinois	18
Indiana	18
Iowa	18
Kansas	18/16 if married
Kentucky	18
Louisiana	18
Maine	18
Maryland	18
Massachusetts	18
Michigan	18
Minnesota	18
Mississippi	18
Missouri	18
Montana	18
Nebraska	19
Nevada	18
New Hampshire	18
New Jersey	18
New Mexico	18
New York	18
North Carolina	18
North Dakota	18
Ohio	18
Oklahoma	18
Oregon	18
Pennsylvania	18
Puerto Rico	21
Rhode Island	18
South Carolina	18
South Dakota	18
Tennessee	18
Texas	18
Utah	18
Vermont	18
Virgin Islands	18
Virginia	18
Washington	18
West Virginia	18
Wisconsin	18
Wyoming	18
Non-Resident Aliens	19

▲Top

Beneficiaries

Can I change the beneficiary on my IRA?

Yes, to change the beneficiary(ies), complete an IRA Change of Beneficiary form.

▲Top

Contributions

How much can I contribute?

In Traditional or Roth IRAs, you can generally contribute up to $5,000 (for 2009) each year, not to exceed your annual earned income. Income restrictions may limit the amount you can contribute to a Roth IRA. Individuals who attain the age of 50 before the close of the taxable year may contribute an amount in excess of the basic annual IRA contribution limit as follows: 2006 and beyond, $1,000. If you have no earned income, your spouse may make a $5,000 contribution to your Traditional IRA as long as the total of both contributions does not exceed your spouse's total earned income.

▲Top

Is my contribution tax-deductible?

Contributions to a Traditional IRA may be tax-deductible. Consult your tax professional for details. All contributions to a Roth IRA are taxable.

▲Top

What should I do if I made an excess contribution to my IRA?

Please consult your tax professional to determine the best course of action when an excess contribution has been made to your IRA. To remove the excess amount from your account, you must complete an IRA Removal of Excess Form. Any tax liabilities and/or penalties involved in doing so will need to be determined by your tax advisor.

▲Top

Distributions

With the exception of Roth IRAs, beginning in the year that the IRA owner turns age 70½, distributions must begin. At this time, you have the choice of either calculating the required minimum distribution (RMD) amount on your own (or through a tax advisor), or TD AMERITRADE will calculate it for a fee. If you fail to take the required distribution or take only a portion of the required amount, you may be subject to a substantial penalty. Consult your tax advisor for assistance in determining the amount of your required distribution. A fee will be assessed for early distributions. This amount is automatically deducted from the funds in your IRA at the time of the distribution, or you may include a check with your IRA Distribution Form. If you prefer, have the fee deducted from another TD AMERITRADE account by indicating this in a letter of instruction signed by you and any co-owners.

Distributions cannot be processed until the total amount requested has settled. All trades have a three-business day settlement period, during which time the positions (or cash proceeds) may not be removed from the account. The distribution will remain pending until any trades and/or open orders that affect the requested distribution amount have settled or been canceled by the account owner.

You will receive a 1099-R shortly after the end of the year showing the cumulative distribution value reported to the IRS. Please contact a tax advisor for additional information regarding any tax liabilities involved when taking early distributions.

▲Top

Can I take a normal distribution from my Traditional IRA?

If you have reached the age of 59½, you may take a normal distribution from your Traditional IRA. A normal distribution is a penalty-free, taxable withdrawal. Funds may be removed from the Traditional IRA by completing an IRA Distribution Form, or by logging on to your account.

▲Top

Can I take an early distribution from my Traditional IRA?

Early distributions are subject to taxes and, in some cases, an early distribution penalty. Consult your tax professional for more information on early withdrawal penalties. Funds can be removed from your Traditional IRA by completing an IRA Distribution Form, or by logging on to your account.

▲Top

Can I take a distribution from my Roth IRA?

Roth IRA owners may take a distribution from their Roth IRA assets at any time by completing a Roth IRA Distribution Request Form, or by logging on to your account. Annual contributions may be withdrawn tax-free and penalty-free by the due date for the tax year in which they were contributed. To take a qualified distribution exempt from federal taxes and penalties, two requirements must be met:

Your Roth IRA must be established for five years.
And your distribution must be for one of the following reasons:
- You have reached the age of 59½.
- You are disabled and have provided the required support documentation.
- You are a first-time home buyer (maximum $10,000).

▲Top

Can I write checks from my IRA?

If you have reached the age of 59½, you may apply for check writing capabilities from your IRA account. Checks written from your IRA will be normal distributions from your IRA. A normal distribution is a penalty-free, taxable withdrawal.

Note: Only Traditional IRAs, Rollover IRAs and SEP IRAs are eligible for checking.

▲Top

Fees

What are the fees associated with my IRA?

Please see Rates & Fees for information on IRA fees.

▲Top

IRS reporting

How are my IRA transactions reported to the IRS?

If you remove funds from your account during the calendar year, you will receive a 1099-R form showing the amounts reported to the IRS. These forms are mailed by January 31 for the preceding calendar year.

All funds coming into an IRA are reported to the IRS and also mailed to our clients on Form 5498. Form 5498 covers the period between January 1 and April 15 of the following year. These forms are mailed by May 31 for the preceding tax year.

Direct Transfers are not reported to the IRS and will not show on either of these forms.

If you have any additional questions on how your IRA transactions are reported, please consult your tax advisor or visit the IRS Web site at www.irs.ustreas.gov.

▲Top

How will my conversion be reported to the IRS?

The value of your conversion to a Roth IRA will be reported on Form 1099-R from your Traditional IRA. It will also be reported as a conversion amount on Form 5498 from your Roth IRA. For more information on these forms, consult your tax advisor or visit the IRS Web site at www.irs.ustreas.gov.

▲Top

Transfers & Rollovers

When considering a transfer, keep in mind that there is a difference between a rollover and a transfer. In a transfer, you never take possession of the assets. It goes from one institution to another. A rollover occurs when:

You take a distribution from your IRA and return it to an IRA within 60 days.
You move assets from a Qualified Retirement plan (QRP) into a Traditional, Rollover or SEP IRA.

	Traditional	Rollover	Roth	QRP	SIMPLE
Traditional	yes	yes	conversion or recharacterization	yes	no
Rollover	yes	yes	conversion	yes	no
Roth	recharacterization	recharacterization	yes	recharacterization	recharacterization of a conversion
SEP	yes	yes	conversion	yes	no
SIMPLE	yes*	yes*	conversion or recharacterization*	yes*	yes
Coverdell ESA	no	no	no	no	no
QRPs	yes	yes	no	yes	no

*SIMPLE IRAs can only be transferred to another SIMPLE IRA if they have been established for less than two years.

You may want to consult your tax advisor before transferring your IRA. Certain tax implications could be involved if it is done incorrectly.

▲Top

Can I move money from my Traditional IRA to my Roth IRA?

If you meet the IRS eligibility requirements, you may convert a portion or all of your Traditional IRA to a Roth IRA. To process the conversion, we will need a completed IRA Distribution Request Form. If you do not already have an existing Roth IRA, one will need to be established to receive the converted funds from your Traditional IRA. Contact a tax advisor for additional information regarding the tax liabilities involved when converting.

Please note when converting to a Roth IRA, a fee will be assessed if you are under 59½. This amount is automatically deducted from the funds in your IRA at the time of the distribution, or you may include a check with your IRA Distribution Request Form. If you prefer, have the fee deducted from another TD AMERITRADE account by indicating this in a letter of instruction signed by you and any co-owners.

All stock trades have a three-business day settlement period during which time the positions may not be removed from the account. Therefore, your Traditional IRA cannot be converted unless all trading activity in the account, or the portion of the account that is being converted, has settled. The conversion will remain pending until all trades have settled and the account owner has canceled any open orders. Once the completed paperwork is received, the conversion process takes approximately three to five business days.

▲Top

Can I change my Roth IRA to a Traditional IRA?

Changing all or a portion of an IRA contribution from one type of IRA to another is called a "recharacterization." You may recharacterize a contribution, a conversion or both. In each instance, a completed IRA Recharacterization Form is required. In addition, both types of IRAs involved must be established at TD AMERITRADE to facilitate the movement.

Things to do when recharacterizing your IRA fees:

A fee is assessed for recharacterization and will be automatically deducted from the funds in your current IRA at the time of the recharacterization.
If you are recharacterizing both a conversion and a contribution, a fee will be assessed for each transaction. If the necessary funds are not available in your account, you may have the fee deducted from one of your other TD AMERITRADE accounts by indicating this in a letter of instruction signed by you and any co-owners.
Or accompany the IRA Recharacterization Form with a check to cover the fee.

Account activity:

All stock trades have a three-day settlement period during which time the positions may not be removed from the account.
Your current IRA cannot be recharacterized unless all trading activity in the account, or the portion of the account affected, has settled.
The recharacterization will remain pending until all trades have settled and the account owner has cancelled any open orders.

Once the completed paperwork is received, the request should be completed within three to five business days. Please refer to the
IRA Recharacterization Form and your IRA Disclosure Statement for more specific information regarding recharacterizing your IRA. You may also want to speak with a tax professional regarding any tax liabilities that may result.

▲Top

What is considered a Qualified Retirement Plan?

The following are designated as qualified retirement plans and may be transferred to certain types of IRAs: Money Purchase, Pension, Profit Sharing, Keogh, Defined Benefit and Defined Contribution.

▲Top

Can I open a Pension Plan/Keogh?

While TD AMERITRADE does not handle the administrative aspects of employer-sponsored retirement plans, we are able to hold the assets in a tax-exempt trust account. In this case, the funds/assets would be held in the account here, and the trustee(s) of the account (usually the benefits administrator(s) of the sponsoring company) would be responsible for reporting the account activity to the IRS. To open this type of account, we require a completed account application signed by the trustee(s), a complete copy of the trust establishing the plan signed by the trustee(s), including any amendments and $2,000 minimum equity. Only the trustee(s) will have trading authority on the account. The plan participant may have trading authority by completing a Limited Trading Authorization Form that is signed by both the participant and the trustee(s). For more information on trust accounts, please visit our Contact Us section for information on how to contact a New Accounts representative.

▲Top

	Call us.
	Visit us.
	Email us.

IRA FAQs

Answers to your Frequently Asked Questions

Try Asking Ted.