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IRAs
We don’t charge an annual fee for maintaining an Ally Invest IRA account. There’s a $25 fee for terminating an Ally Invest IRA account, which is charged when all funds are removed from the IRA. There’s both a $50 transfer fee and a $25 termination fee for a full transfer out of your Ally Invest IRA account, while partial account transfers have a $50 transfer fee.
The IRA contribution limit for 2019 is $6,000 or $7,000 if you’re age 50 or older at the end of the calendar year. For 2018, the limit is $5,500 or $6,500 if you’re age 50 or older at the end of the calendar year. There may be limitations to the amount you can contribute based on your filing status and income. Contact your tax professional for questions about your contribution strategy.
Traditional IRA: An Individual Retirement Account (IRA) allows investors to deposit income, up to a specific annual maximum, toward investments that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to $6,000 ($7,000 for those 50 and over) to their Traditional IRA. Contributions to a Traditional IRA are made with pre-tax dollars and may be tax-deductible depending on the taxpayer's income, tax-filing status, and other factors. Ally Invest has no annual fees or maintenance fees for Traditional IRAs. Please review IRS Publication 590 for more information on Traditional IRAs.
Roth IRA: A Roth IRA is a retirement account in which contributions are not tax deductible (contributions are made with post-tax dollars). Roth IRAs do allow for tax exempt distributions. Typically, funds must have been held in the account for a minimum of 5 years and you must be over the age of 59 ½ to make a qualified distribution. There are however exceptions to these rules depending on your specific situation. There are also income requirements which must be met to be eligible for a Roth IRA. As of 2017, if you file individually and earn $133,000 or more, you would not be eligible for a Roth. If filing jointly, those earning $196,000 or more would not be eligible. Ally Invest has no annual fees or maintenance fees for Roth IRAs. Please review IRS Publication 590 for more information on Roth IRAs.
Rollover IRA: A rollover IRA is a retirement account designed to facilitate the movement of holdings from a Corporate Retirement Plan such as a 401K Plan. The Rollover IRA is interchangeable with a Traditional IRA. Contributions may be tax deductible depending on the client's income level, and the same $6,000 ($7,000 age 50 and over) contribution limit that applies to Traditional and Roth IRAs applies to Rollover accounts as well. Ally Invest has no annual fees or maintenance fees for Rollover IRAs. Please review IRS Publication 590 for more information on performing a rollover.
SIMPLE IRA: SIMPLE stands for Savings Incentive Match Plans for Employees. It is a type of salary reduction plan that qualifying employers may offer to their employees. Employers that do not offer any other retirement plan and generally have no more than 100 employees can offer SIMPLE IRAs to their employees. Self-employed individuals are also are eligible to establish SIMPLE IRA accounts. SIMPLE IRAs must be maintained on a calendar year basis. For more details about SIMPLE IRAs, please consult IRS Publication 560 and Publication 4334.
SEP IRA: SEP stands for Simplified Employee Pension, and is a type of retirement account that's similar to an Individual Retirement Account (IRA), but for either self-employed individuals or small companies with typically less than 25 employees. Tax-free contributions are made by an employee, or tax-deductible contributions are made by an employer on behalf of an employee. Upon retirement, withdrawals are taxed at the retiree's current tax bracket. For more details about SEP IRA's, please consult IRS Publication 560 and Publication 4333.
Coverdell Education Savings Account (ESA): A Coverdell Education Savings Account is a tax privileged account designed for saving for education expenses. When the account is established, the beneficiary of the account must be under 18 or be a special needs beneficiary. Annual contributions to Coverdell ESAs are limited to $2,000, and those contributions are not tax deductible. Distributions are tax-free as long as they are used for qualified education expenses and don’t exceed the amount of those expenses. Please review IRS Publication 970 for more information pertaining to Coverdell Education Savings Accounts.
| Traditional IRA | Roth IRA | |
|---|---|---|
| Contribution limits | Currently $6,000 with a $1,000 catch up clause for clients 50 or older as of the contribution year | Currently $6,000 with a $1,000 catch up clause for clients 50 or older as of the contribution year |
| Contribution Age Limit | Contributions not allowed as of the year the client reaches 70½. | No age limitations on contributions. |
| Income Caps for Contributions | No income cap to contribute. | Adjusted Gross Income (AGI) of less than $196,000 if filing jointly or less than $133,000 if filing individually. |
| Tax Consequences for Earnings | Gains grow on a tax-deferred basis. For tax purposes, earnings are added to income for the year distribution is taken. | Gains grow tax-deferred. Qualified distributions aren't taxed, including earnings. |
| Deductibility | Contributions may be deductible, depending on income level and participation in a Corporate Retirement Plan. | Contributions are not deductible; they're considered to be post-tax contributions. |
| Distribution Regulations | Distributions may be taken at any time. Distributions before the age of 59½ may be subject to a 10% penalty if taken before that age. | Distributions may be taken at any time. Distributions are tax and penalty-free if qualified. Generally to be qualified, the funds must be held in the account for at least 5 years and meet certain criteria if the client is below 59½. Qualified early distribution criteria include: educational expenses, medical expenses, and the purchase of a first home. |
| Required Minimum Distribution | Generally must begin taking distributions by April 1st of the year following the year in which you reach age 70½. | Roth Account holders aren’t subject to RMD rules. However, beneficiaries receiving Roth IRA funds are subject to the RMD rules. |
The easiest way to fund an IRA is through a bank (ACH) transfer. Once you open an account, you can link your bank account to your Ally Invest account by selecting Transfers and then Linked Bank Accounts. After you link your bank account, you can make contributions any time you want or set up an automatically recurring contribution.
You can also fund your IRA through a bank wire or by sending us a check. When funding by these methods, please be sure to indicate the contribution year on your wire or check so we can properly label your contribution.
Lastly, you can contribute to an IRA by performing a transfer of cash from an existing individual or joint Ally Invest account. If performing a journal from a joint account to an IRA Account, the original IRA Contribution Form will need to be notarized and mailed to Ally Invest. Download the journal request form (PDF)
In an IRA, you can trade stocks, ETFs, mutual funds and fixed income products such as bonds or CDs. Because industry regulations prohibit IRA accounts from having margin, short selling and selling naked options aren’t allowed.
You may also be able to make up to Level 3 option trades in your IRA. Depending on your approval level, you may be able to use strategies such as: covered calls, cash-secured puts, long puts and calls, spreads and other multi-leg strategies. Review our Option Account Agreement and Application (PDF) to learn more about our requirements for trading options at Ally Invest.
To add or change a beneficiary to your Ally Invest IRA account, complete the IRA Beneficiary Designation (PDF). Upload it in the forms section after logging in to your account or fax to 1-866-699-0563.
To add or change a beneficiary for a non-IRA Ally Invest account, complete the Beneficiary Form (PDF), have it notarized and mail it to:
Ally Invest
PO Box 30248
Charlotte, NC 28230