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Traditional or Contributory IRA
Rollover IRA
While the two types of accounts may potentially be merged, the difference in title refers to the way the IRA was originally funded.
Traditional or Contributory IRA
The Traditional deductible IRA was created for individuals that don't participate in an employer sponsored retirement plan. Although, certain individuals that do participate in an employer sponsored retirement program may still qualify for this IRA. The name implies that it has been or will be funded via cash contributions by the IRA owner.
Income your account may earn is not taxable 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 $4,000 a year that may be tax deferred. Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the following contribution limit increases are in effect: 2002-2004 $3,000; 2005-2007 $4,000; 2008 and beyond $5,000, plus potential COLA 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: 2002-2005 $500; 2006 and beyond $1,000. Consult your tax adviser 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
applicable to SEP IRAs only).
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 (401k, 403b,
etc.). SIMPLE IRA transfers or rollovers must meet the two-year
rule.
To open this account, please complete a Traditional IRA application.
Rollover (Non-Contributory) IRA
This type of IRA was designed as a holding account for funds distributed
from a qualified retirement plan (401k, 403b, etc.). After 2002,
it was no longer as necessary to maintain rollover IRAs.
Now, funds rolled to any IRA from a qualified plan may be returned
to another qualified retirement plan in the future.
PENSCO Trust generally cannot request the funds from your current
pension plan on your behalf. You may want to contact the administrator
of your qualified retirement plan to find out whether or not you
are eligible to roll the funds out of the plan, and what the procedures
are for "rolling over" the funds from the plan.
Some plans require that you first establish your receiving IRA
and provide them with the account number to facilitate the rollover.
Should this be the case, you may submit your IRA application to
us in advance of requesting the rollover. We will process your application
and email you your new account number within 24 hours of receiving
it. Click here to read more about
how to roll funds over from a qualified plan.
Transfers may be made to this account from another Rollover IRA
or Traditional IRA.
To open this account, please complete a Traditional IRA application.
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