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Ally BankAbout IRAs
  • Basics

    About Individual Retirement Accounts (IRAs)

    An IRA is designed to help you grow your money for retirement. We know the financial markets can be uncertain and full of risk, which is why we offer low risk IRA products such as CDs and savings accounts that offer more consistent returns and are FDIC-insured. Having an IRA CD account with Ally Bank is a safe and secure way to grow your retirement savings.

    Here's how IRAs work

    Step 1: Pick a Plan

    • Traditional IRA
      A retirement savings plan designed for tax-deferred growth that you don’t pay taxes on until you withdraw money once you reach retirement. You might be able to deduct your contributions on your tax return, depending on your income level.
    • Roth IRA
      A retirement savings plan designed for tax-free growth, a Roth IRA allows you to make tax-free withdrawals of any original contributions you made at any time. Please be aware that there are maximum income restrictions to be eligible to contribute to a Roth IRA.
    • SEP IRA
      A retirement savings plan designed for tax-deferred growth that provides a way for small business owners to contribute to a retirement plan for themselves and any other eligible employees.

    Step 2: Add Products

    Choose to add IRA CDs, IRA Online Savings Accounts, or a combination of both to any Ally IRA plan.

    IRA High Yield CD
    IRA Raise Your Rate CD
    IRA Online Savings Account

    We recommend that you work with a tax professional to determine what combination will help you meet your retirement goals.

    Compare IRA Plans and Products

    Get more details about our IRA products and plans, contribution and distribution requirements, and tax advantages in the comparison chart.

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  • Contributions

    Making IRA annual contributions

    One way to deposit funds into your IRA is by making contributions. There are some restrictions placed on how you can add money to IRAs.

    Traditional IRAs — If you’re younger than age 70 ½ and have taxable compensation, you can make a contribution. In some cases, your contributions are tax-deductible in the year they are made and the money you add to your account grows tax-deferred until you take it out in retirement.

    Roth IRAs — If you have taxable compensation and meet the eligibility requirements, you can make contributions at any age and qualified distributions are tax free. Keep in mind: your Roth IRA contributions are not tax-deductible.

    SEP IRAs — Employers can make retirement contributions for themselves and on behalf of their employees. Personal contributions into a SEP IRA are not permitted.

    Contribution requirements

    Get more details on the contribution eligibility requirements and annual deadlines in the comparison chart.

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  • Distributions

    Taking IRA Distributions

    Withdrawing money from your IRA is referred to as taking a distribution. IRAs were designed to save money for retirement, with distributions being made after you reach 59 ½ years of age. You can take IRA distributions at any time, but CD early withdrawal penalties and an additional IRS tax may apply.

    Traditional IRAs — Distributions are taxable, and if you’re younger than age 59 ½ you could be subject to an additional 10% IRS tax penalty. Minimum distributions are required once you reach age 70 ½.

    Roth IRAs — Distributions of your original contribution are always tax free. If you‘re 59 ½ or older and have met the IRS’ 5-year holding period, all of your distributions are tax free. If you’re younger than age 59 ½, however, you could be subject to an additional 10% IRS tax penalty. There are no minimum required distributions.

    SEP IRAs — Distributions are taxable, and if you’re younger than age 59 ½, you could be subject to an additional 10% IRS tax penalty. Minimum distributions are required once you reach age 70 ½.

    Distribution Requirements

    Get more details on the Required Minimum Distributions (RMDs) and age requirements in the comparison chart.

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  • Rollovers & Transfers

    Rollovers and Transfers

    Rollovers

    A rollover is moving funds from one retirement savings account or plan, like an old IRA or 401K, to a new or consolidated IRA. Rollovers from an IRA are subject to federal income tax unless you complete the transaction within 60 days of receiving the funds. Also, IRAs can be part of a tax-free rollover only once in a single calendar year. This means, if you make a tax-free rollover of a distribution from an IRA, you can’t make another rollover from the same IRA within that same year.

    Direct rollovers

    A direct rollover is when funds are moved from your workplace retirement plan directly to your IRA. Since you never hold the funds, there are no taxes withheld.

    Trustee-to-Trustee Transfers

    A trustee-to-trustee transfer is moving funds from one IRA to another IRA. The money is transferred directly from one IRA to another on your behalf. Transfers can take place as often as you like, and they are not taxable.

    We recommend you work with a tax professional to help you make the best decision for your retirement goals.

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  • Roth IRA Conversion

    Converting a Traditional IRA to a Roth IRA

    If you are thinking about converting a Traditional IRA to a Roth IRA, here are a few things to consider:

    • Paying taxes — You’ll be taxed on the amount you’re converting from your Traditional IRA to the new Roth IRA. You can pay these taxes using funds from your IRA; however, this will reduce the benefit of converting by lessening the Roth IRA plan balance and limiting future growth.

    • Your age — If you are close to retirement, converting a Traditional IRA to a Roth IRA may not be the best choice for you. You’ll have less time to make up for the tax impact of the Roth IRA conversion.

    • Current tax benefits — The income you report at the time of conversion could push you into a higher tax bracket, excluding you from other tax benefits, such as child and higher education tax credits.

    • Retirement income — If you end up in a lower tax bracket upon retirement, the taxes you pay on your distributions could be less than the rate you would pay on a conversion today.

    • Inheritance plan — A Roth IRA doesn’t require minimum withdrawals during the life of the IRA owner, so the full amount may be passed to the beneficiary.

    We recommend that you work with a tax professional to help you make the best decision for your situation.

  • FAQs

    Frequently asked questions

    Contributions

    Distributions

    Beneficiaries

    General