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Individual Retirement Arrangements (IRAs) FAQs
An Individual Retirement Arrangement (IRA) is a retirement savings account with tax advantages. Ally offers three types of IRA plans: Traditional IRA, Roth IRA and SEP IRA (Simplified Employee Pension).
A SEP IRA is an IRA that allows contributions to be made by an employer on behalf of an employee. Business owners and anyone who is self-employed can also use this type of IRA to save for retirement. Please note that IRS guidelines prohibit employees from making personal contributions to their SEP IRA.
Yes, although this may result in you having to pay some taxes on your earnings from the Traditional IRA once you convert to a Roth IRA. Check with your tax professional to see if this is a good option for you.
For the current tax year, you can contribute to your IRA anytime during the calendar year and before the official annual IRS filing due date – not including extensions. Learn more about contributions or go to www.irs.gov for more information.
For IRA CDs, after you’ve made an initial funding deposit, you won’t be able to add more money until the CD reaches maturity. You’ll have a 10-day grace period, starting at the maturity date, to make any changes.
Annual IRA contribution limits may apply. Consult your tax professional for advice.
Yes. The IRS establishes limits for IRAs, depending on what type of plan you choose. Check out our IRA comparison chart for more details. You may want to check with the IRS or a tax professional to find out what limits may apply to you.
The IRS defines eligible income as: wages, salary, tips, professional fees, bonuses, taxable alimony, commissions resulting from profits or sales, income earned if you are self-employed and the sole proprietor of a business, and the income you receive as a partner for providing services. Anything not listed here is ineligible income.
Yes. Keep in mind that your ability to deduct your IRA contributions on your taxes may be affected by the fact that you (or your spouse) are covered under your employer's retirement plan. Please check with the IRS or your tax professional for more information.
You can withdraw money from your Traditional IRA at any time; however, if you are under the age of 59½, the Internal Revenue Service (IRS) could charge you a 10% tax. There are exceptions, so please check with the IRS or your tax professional before making a withdrawal.
It depends. Minimum distribution rules changed in 2020. If you have a Traditional or SEP IRA, the IRS requires that you take an annual minimum distribution by April 1st of the year following the year you turn 72 or if you turn 70 ½ in 2020. If you turned 70 ½ in or before 2019, you’re required to take a minimum distribution. The amount of your distribution depends on how much you have in your account divided by your life expectancy. Check with the IRS or your tax professional for more information on how to calculate your distribution amount. Due to the CARES Act, Required Minimum distributions for 2020 have been waived.
If you have a Roth IRA, you don't have to take an annual minimum distribution, so your money can grow until you need it.
It's always best to consult with a tax professional before making any decisions about tax withholdings on your distribution.
For Traditional IRAs and SEP IRAs, the IRS requires us to withhold 10% in federal income taxes from your IRA distributions unless you tell us not to withhold this amount or to withhold more than 10%.
For Roth IRAs, the IRS does not typically require us to withhold federal income tax on qualified Roth IRA distributions. An exception to the general rule applies to conversions from a Traditional IRA to a Roth IRA; then, we are required to automatically withhold 10% on the amount converted. You can also choose not to withhold or withhold at greater than 10% on this amount.
An IRA Rollover is the movement of assets from an IRA or qualified retirement plan, like a 401(k) plan or 403(b) plan, to an Ally Bank IRA. Rollovers could be subject to tax consequences. Please consult your tax advisor regarding frequency of rolling over funds.
An IRA Transfer moves funds directly from the trustee or custodian at another institution to an Ally Bank IRA. For example, from a Traditional IRA at your other bank into your Traditional IRA at Ally Bank.
Get the facts about IRAs, which explains different ways to move your retirement money around and how to convert one type of IRA plan to another, such as Traditional to Roth. You can also visit the IRS for more information.