Frequently Asked Questions About IRAs

General IRA Questions

  1. I am self-employed; is there an IRA that is right for me?
  2. Can I open more than one IRA?
  3. I have a retirement plan at work—can I still open and contribute to an IRA?
  4. How do I fund my IRA?
  5. Can I withdraw money from an IRA?
  6. How do I open a Scottrade IRA?

 

Rollover IRA Questions

  1. What is an IRA rollover and a 401(k) rollover?
  2. Can I roll over multiple IRA or 401(k) accounts?
  3. What is the difference between indirect vs. direct rollover?
  4. What are the rollover rules?

 

Traditional IRA Questions

  1. What is a Traditional IRA?
  2. What are the eligibility requirements, contribution limits and tax advantages for a Traditional IRA?

 

Roth IRA Questions

  1. What is a Roth IRA?
  2. What is the difference between a Roth and Traditional IRA?
  3. What are the eligibility requirements, contribution limits and tax advantages for a Roth IRA?

 

SEP IRA Questions

  1. What is a SEP IRA?
  2. What are the eligibility requirements, contribution limits and tax advantages for a SEP IRA?

 

SIMPLE IRA Questions

  1. What is a SIMPLE IRA?
  2. What is the difference between a SIMPLE IRA and a SEP IRA?
  3. What are the eligibility requirements, contribution limits and tax advantages for a SIMPLE IRA?


 

General IRA Questions
 

1. I am self-employed; is there an IRA that is right for me?
Depending on your situation, a SIMPLE IRA (Savings Incentive Match Plan for Employees) or a SEP IRA (Simplified Employee Pension) may be a fit for you.

Depending on your financial goals, you may want to review the details of the Traditional and Roth IRA, as well.

2. Can I open more than one IRA?
Yes, it is possible to open more than one IRA, but you will want to make sure you have a solid understanding of the contribution limits (these may vary depending on your situation).

3. I have a retirement plan at work—can I still open and contribute to an IRA?
Yes, you may open an individual retirement account even if you participate in an employer-sponsored retirement savings program, such as a 401(k). However, it’s important you understand the contribution limits and types of IRAs before you choose one which meets your needs.

4. How do I fund my IRA?
At Scottrade, there are many ways to fund your IRA, including


5. Can I withdraw money from an IRA?

You can withdraw money at any time from an IRA, but you may receive a 10% tax penalty if you withdraw before age 59 ½. Distribution rules vary based on the type of IRA.

6. How do I open a Scottrade IRA?
To open a new Scottrade IRA, you may fill out an online application or contact your local Scottrade team.


Rollover IRA Questions
 

1. What is an IRA rollover and a 401(k) rollover?
An IRA rollover is when you transfer an existing retirement account to Scottrade. Traditional IRAs roll over to Traditional IRAs, and Roth IRAs roll over into Roth IRAs. Contribution limits do not apply with a rollover. A 401(k) rollover is when you roll over an old retirement account from a previous employer into a Traditional or Roth IRA. For more information, read Rollover IRAs.

2. Can I roll over multiple IRA or 401(k) accounts?
Yes, you can roll over multiple IRA, old 401(k) or old 403(b) accounts to Scottrade.

3. What is the difference between a direct and indirect rollover?
A direct IRA transfer allows you to roll over funds from an employer plan to the custodian of your IRA. You're responsible for opening the IRA, providing the IRA account number to the person who handles retirement matters for your employer, and authorizing the move.

An indirect rollover lets you handle the transfer yourself by requesting a check from your employer. However, your employer is required to withhold 20% of the balance you're moving as a prepayment of the income taxes that might be due if you fail to complete the rollover on time.

4. What are the rollover rules?
When you are moving your funds from an IRA at one financial institution to another IRA at a different financial institution, you must roll over all the funds within 60 days. The 60-day IRA rule simply means that if you do not place all the money dispersed from your original IRA into the new IRA account within 60 days, there will be possible taxes and IRA penalties.


Traditional IRA Questions
 

1. What is a Traditional IRA?
A Traditional IRA is a retirement account that allows you to set aside money pre-tax that will grow tax-deferred until the money is withdrawn.

2. What are the eligibility requirements, contribution limits and tax advantages for a Traditional IRA?
Our Traditional IRA chart can help answer any questions you may have about the specifics of this IRA.


Roth IRA Questions
 

1. What is a Roth IRA?
A Roth IRA is a retirement account that allows you to set aside money post-tax that will grow tax-free. For more information about contribution limits, eligibility and tax advantages, read Roth IRAs.

2. What is the difference between a Roth and Traditional IRA?
The primary difference between a Roth IRA and a Traditional IRA is that Roth contributions are set aside post-tax, while Traditional contributions may be tax-deductible. For a closer look, read more about Roth and Traditional IRAs.

3. What are the eligibility requirements, contribution limits and tax advantages for a Traditional IRA?
Our Roth IRA chart can help answer any questions you may have about the specifics of this IRA.


SEP IRA Questions
 

1. What is a SEP IRA?
A SEP (Simplified Employee Pension) IRA is a retirement plan available to those who are self-employed or whose corporation has 25 employees or fewer. The employers make contributions to the plan on the employee’s behalf.

2. What are the eligibility requirements, contribution limits and tax advantages for a SEP IRA?
Our SEP IRA chart can help answer any questions you may have about the specifics of this IRA.


SIMPLE IRA Questions
 

1. What is a SIMPLE IRA?
A SIMPLE (Savings Incentive Match Plan for Employees) IRA Is a retirement plan that small business owners may open up for their employees. Both employers and employees make contributions to the account.

2. What is the difference between a SIMPLE IRA and a SEP IRA?
One primary difference is that a SEP IRA is offered to those who are self-employed, and just the employers make contributions, while a SIMPLE IRA is offered to those who work at a small business, and both employers and employees make contributions. To dig deeper into the similarities and differences, visit the SEP IRA and SIMPLE IRA pages.

3. What are the eligibility requirements, contribution limits and tax advantages for a SIMPLE IRA?
Our SIMPLE IRA chart can help answer any questions you may have about the specifics of this IRA.

Open An Account

Before making any rollover decisions, investors should research and consider all available retirement options carefully. Your decision should reflect consideration of various factors, including the benefits and penalties involved. Some of these factors include, but are not limited to, investment or account related fees and expenses, differing levels of service available, withdrawal penalties, creditors and legal protections, required minimum distributions, and factors related to owning employer stock. The importance of these factors will vary depending on your individual needs and circumstances. Tax consequences may vary depending on state law and your individual situation. Scottrade does not provide tax advice. Please consult your tax or legal advisor for questions concerning your personal tax or financial situation.