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IRAs

Please note: We provide this for informational purposes only. We do not provide tax advice.

*Note: Depending on your user access level, and if you have an advisor who can access your account, some of the functions described here may not be available to you, or may be performed by your advisor.

Please note: We provide this for informational purposes only. We do not provide tax advice.

To which year do my client’s IRA contributions apply?

SEP and SIMPLE IRA contributions are reported on IRS Form 5498 in the year the contribution occurs.

IRA contributions we receive are designated as current year IRA contributions by default. If your client sends us a contribution check between January 1 and the U.S. Federal tax filing deadline for natural persons (generally April 15th), your client can designate those contributions as prior year contributions for other types of IRAs, by following the steps below.

If your client wishes to make a prior year contribution, please do the following:

  • Contribute by electronic deposit (EFT) initiated on our site, where you will designate the desired tax year as part of the online deposit process. Prior year contributions must be received (not just initiated) by the U.S. Federal tax filing deadline for natural persons.
  • When contributing by check, please have your client write the tax year to which the contribution applies on the memo line. If they do not write anything in the memo line, the check amount will be applied as a current year contribution. Envelopes containing a prior year contribution must be postmarked by the U.S. Federal tax filing deadline for natural persons.
  • When contributing by electronic deposit initiated at another financial institution (EFT or wire) please have your client send us an email when they send their contribution referencing the date of the deposit, the dollar amount, their account number with us and instructions that the contribution should apply to the prior tax year. Prior year contributions must be received (not just initiated) by the U.S. Federal tax filing deadline for natural persons.

Can I open an IRA for the prior year in the current year for a client?

You can open an IRA for a client for the prior year from January 1 through the time that the client files their U.S. Federal Tax return, or the deadline for filing U.S. Federal tax filing deadline for that year, which is generally April 15th.

How are Roth Conversions processed?

Roth conversions are processed by completing an IRA Distribution Form.

How do I open a Beneficiary IRA for my client?

To open a Beneficiary IRA:

  1. Open a Rollover IRA or Roth IRA for your client through our online account opening path
  2. Then submit a completed and signed Beneficiary IRA Amendment Form.

Beneficiary IRAs are only allowed to hold IRA funds/assets inherited from a deceased person’s IRA or a retirement account on which your client is listed as a beneficiary.

How do I request a check, EFT or wire distribution for my client from an IRA?

Requests for IRA distributions directly to clients are made online from the Withdrawal Request portion of the Transfer Money page. This page will direct users to the IRA Distribution form for certain withdrawal types that are not available online.

What is a recharacterization?

A recharacterization occurs when your client contributes or converts funds into one IRA account type (Roth for example) and later wished to change the contribution or conversion to another IRA account type.

An IRA recharacterization can apply to the following:

  1. If your client contributed money to their Traditional IRA, they can recharacterize the contribution so that the funds count toward a Roth IRA contribution for the same tax year.
  2. If your client contributed money to a Roth IRA, they can recharacterize the contribution so that the funds count instead toward a Traditional IRA contribution for the same tax year.

How do I recharacterize my client’s Traditional or Roth IRA contribution?

Recharacterizations can currently only be submitted to us using the IRA Distribution form. To recharacterize an IRA contribution, please complete the IRA Distribution Form and choose the recharacterization option under Part 2: Reason for Withdrawal.

What is an excess contribution?

An excess contribution is any amount contributed to your client’s IRA that is greater than their annual maximum allowable contribution limit. Please review the IRS IRA Contribution Limits for more information. Excess contributions can also occur for Beneficiary IRA holders who make contributions to their Beneficiary IRA or because of invalid rollovers. Please see IRS IRA FAQs for more detailed information.

Are penalties assessed if excess contributions are not removed?

Tax penalties are assessed by the IRS if excess contributions are not withdrawn by the tax filing due date.

How do I correct my client’s excess IRA contributions?

To correct an excess IRA contribution for your client, you must withdraw the excess amount and any earnings attributable to the excess amount from the IRA by the owner’s tax filing deadline. Earnings attributable to the excess contribution amount may be subject to a 10% early withdrawal penalty if your client is under 59½ years old.

To withdraw excess contributions, complete the IRA Distribution Form.

For additional information on how to correct excess contributions, please refer to IRS Publication 590: Individual Retirement Arrangements (IRA).