IRA Disclosure Statement and Custodial Agreement: The Disclosure Statement and Custodial Agreement is designed to provide you with an overview of an IRA including tax benefits and considerations, as well as contribution and distribution rules. The first part of each document includes the disclosure statement required by the Internal Revenue Service. The disclosures will explain the basic rules and tax considerations you should understand if you adopt an IRA. The second part of the document includes the Custodial Agreement. Click here to view the documents.
1 Traditional IRA distributions are generally taxed as ordinary income. Qualified Roth IRA distributions are tax-free provided a Roth account has been open for more than five years and the owner is at least age 59½, or as a result of their death, disability, or using the first-time homebuyer exception. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Both may be subject to a 10% IRS tax penalty if distributions are taken prior to age 59½. For SIMPLE IRAs, the IRS penalty increases to 25% if a distribution is taken prior to two years from when the first deposit was made into a participant’s account if under 59½.
2 The “Retirement Plan” box in Box 13 of your W-2 tax form should be checked if you were covered by a retirement plan at work.
3 Your filing status is considered single for IRA contribution purposes if you did not live with your spouse during the tax year. Read IRS Publication 502 for more information https://www.irs.gov/pub/irs-pdf/p501.pdf.
4 Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options is different and may have distinct advantages and disadvantages.
- Roll assets to an IRA
- Leave assets in your former employer’s plan, if plan allows
- Move assets to your new/existing employer’s plan, if plan allows
- Cash out or take a lump sum distribution
When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.
5 Brokerage IRAs with Brokerage Cash Services are eligible for this feature. Online access is required. Talk to your Financial Advisor for more information about the benefits of Brokerage Cash Services.