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General IRA Questions

  • What is an IRA?

    IRA stands for Individual Retirement Account.  An IRA is a tax-deferred investment vehicle used by individuals to set aside funds for retirement. An IRA cannot be held jointly, it must always be in an individual’s name.  There are several types of IRAs, including Traditional IRAs, Roth IRAs, SEP IRAs and SIMPLE IRAs.

  • What is a Traditional IRA?

    A Traditional IRA is any IRA that is not a Roth IRA or a Simple IRA. It is a retirement account in which individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount. Contributions to the Traditional IRA may be tax-deductible depending on certain factors, such as the taxpayer’s income, tax filing status and coverage by an employer-sponsored retirement plans.

  • Who is eligible for a Traditional IRA?

    Persons eligible to make contributions to a Traditional IRA are those who received taxable compensation during the year (or, if they file a joint return, their spouse having received taxable compensation), and they are not age 70 ½ by the end of the year.  In addition, a working spouse may contribute to their non-working spouse’s IRA.

  • What is a Roth IRA?

    A Roth IRA is an Individual Retirement Account that provides tax-free growth and is funded with after-tax dollars. While distributions may be tax-free when redeemed, contributions are not tax deductible (they are made with “after tax” dollars).

  • Who is eligible for a Roth IRA?

    The IRS guidelines define who is eligible to contribute to a Roth IRA based on a person's Modified Adjusted Gross Income (MAGI)* and tax filing status.

  • What is the difference between a Roth IRA and a Traditional IRA?

    One of the key differences between the two types of accounts is that in some cases contributions to Traditional IRAs can be deducted from taxable income while this is never true for Roth IRAs. Another key difference is that all distributions of deductible contributions from a Traditional IRA are taxed as income while qualified distributions from a Roth IRA are Federally Income tax free.

  • Can investors have both a Roth IRA and a Traditional IRA?

    Yes. However the combined amount being contributed to both types of accounts must not exceed that year's contribution limits.

  • Can owners of a Traditional IRA convert it into a Roth IRA?

    Yes, married taxpayers filing jointly, and single filers with an adjusted gross income (AGI) of less than $100,000, can convert their Traditional IRA into a Roth IRA. They will be required to pay income taxes on the amount being converted in the year the conversion is completed. Paperwork to convert their Traditional IRA to a BlackRock Roth IRA can be found by downloading the Roth IRA Enrollment Kit.

  • What is a SEP IRA?

    A SEP – (Simplified Employee Pension) – is a written arrangement that allows small business owners to make deductible contributions for their own and their employee's benefit to a Traditional IRA. A SEP IRA is owned and controlled by the employee, and the employer makes contributions to the financial institution where the SEP IRA is maintained.

  • What is a SIMPLE IRA?

    SIMPLE IRA – (Savings Incentive Match Plan for Employees of Small Employers) – is a tax-favored retirement plan that certain small employers can set up for the benefit of their employees. Small employers are those companies with less than 100 employees. Employees can have their salary reduced by certain percentage each pay period in addition to the employer making matching or non-elective contributions.

  • How do I open an IRA with BlackRock?

    You can open a Traditional, Rollover, Roth or SEP IRA using the BlackRock IRA Application.

    In addition, you can open a SIMPLE IRA (providing your employer offers one) with the SIMPLE Plan Enrollment Kit.

  • What are the options for the beneficiary(ies) of a deceased IRA owner?

    A spouse of a deceased IRA owner has the option of rolling the balance of an account into an account in their own name and treating it as their own IRA, depending on what type of IRA the spouse owned.

    If you are not a spouse of the deceased owner, the portion of the account will be assigned to an Inherited IRA.

  • Where can I learn more about IRAs?

    Enrollment Kits and Disclosure Statements have additional information on IRAs. The IRS Publication 590 is available at www.irs.gov.

IRA Contributions

  • How much can I contribute to a Traditional/SEP IRA?

    The most that can be contributed to a Traditional IRA for the year 2014 is the smaller of the following amounts: $5,500 (or $6,500, if you are age 50 or older), or 100% of taxable compensation for the year.

  • How much can I contribute to a Roth IRA?

    2007 2008
    IF you have taxable compensation and filing status is... AND modified AGI is... THEN for 2007... AND modified AGI is... THEN for 2008
    married filing jointly or qualifying widow(er) less than $156,000 can contribute up to $4,000 (or $5,000, if the age is 50 or older) less than $159,000 can contribute up to $5,000 (or $6,000, if the age is 50 or older)

    at least $156,000 but less than $166,000 the amount that can be contributed is reduced as explained in IRS Publication 590 at least $159,000 but less than $169,000 the amount that can be contributed is reduced as explained in IRS Publication 590

    $166,000 or more cannot contribute to a Roth IRA $169,000 or more cannot contribute to a Roth IRA
    married filing separately and lives with spouse at the time during the year zero (-0-) can contribute up to $4,000 (or $5,000, if the age is 50 or older) zero (-0-) can contribute up to $5,000 (or $6,000, if the age is 50 or older)

    more than zero (-0-) but less than $10,000 the amount contributed is reduced as explained in IRS Publication 590 more than zero (-0-) but less than $10,000 the amount contributed is reduced as explained in IRS Publication 590

    $10,000 or more cannot contribute to a Roth IRA $10,000 or more cannot contribute to a Roth IRA
    single, head of household, or married filing separately and does not live with spouse at any time during the year less than $99,000 can contribute up to $4,000 (or $5,000, if the age is 50 or older) less than $101,000 can contribute up to $5,000 (or $6,000, if the age is 50 or older)

    at least $99,000 but less than $114,000 the amount that can be contributed is reduced as explained in IRS Publication 590 at least $101,000 but less than $116,000 the amount that can be contributed is reduced as explained in IRS Publication 590

    $114,000 or more cannot contribute to a Roth IRA $116,000 or more cannot contribute to a Roth IRA

     

  • Are contributions tax deductible?

    Contributions to a Traditional IRA may be deductible based on clients' modified adjusted gross income, age, and whether they and/or their spouse are covered by employer sponsored plans. For questions regarding tax treatment of IRA contributions please consult IRS Publication 590, visit www.irs.gov or consult a tax advisor.

  • What if I earn more than expected this year and no longer qualify for a Roth IRA but already made a contribution for this year?

    If you made a contribution to a Roth IRA, and then discover that your income will exceed the maximum allowed to contribute to a Roth IRA, the amount contributed for that year can be re-characterized as a contribution to a Traditional IRA or removed from the Roth as excess contribution by their tax filing deadline (including extensions).

  • Can contributions be made to a SIMPLE IRA?

    Contributions are made by the employee through a salary reduction agreement. The employer must additionally make matching or non-elective contributions.

  • Can contributions be made into an Inherited IRA?

    No, contributions cannot be made to an Inherited IRA, although you can be the owner of an Inherited IRA and have a Traditional or Roth IRA in their own name as well that they can make contributions to.

IRA Withdrawals

  • When can an investor take money out of an IRA?

    You can withdraw money from an IRA at any time. However earnings on any money withdrawn from a Traditional IRA before the age of 59 ½ may be subject to a 10% IRS penalty unless it is being used for certain purposes. In addition, you may be taxed on any distribution from a Traditional IRA.

    You can withdraw money from a Roth IRA at any time – in fact, contributions may always be taken tax-free. However, any money exceeding the amount made in contributions prior to age 59 ½ may be subject to a 10% IRS penalty.

    To learn more visit www.irs.gov.

  • When can the money be taken out of a Roth IRA?

    Money can be withdrawn from a Roth IRA at any time. However, any money exceeding the amount made in contributions withdrawn from a Roth IRA prior to the age of 59 ½ may be subject to a 10% IRS penalty. Exemptions can be found in the IRS Publication 590 by visiting www.irs.gov.

  • Am I required to take money out of my Traditional IRA?

    You are required to take an amount referred to as a “required minimum distribution (or “RMD”) from a Traditional IRA beginning the year you attain the age of 70 ½. For beneficiaries of a deceased IRA owner, whether or not the original IRA owner had begun their RMD determines their options for taking distributions from an Inherited IRA.

  • Am I required to take money out of my Roth IRA?

    An owner is never required to take required minimum distributions from a Roth IRA.  However, if you are the non-spouse beneficiary of an IRA, distributions are required to begin December 31st of the year following the owner's death.

  • When can money be taken out of an Inherited IRA?

    Redemptions can be made from an Inherited IRA at any time after it is re-registered into the beneficiary's own name.

  • Are you required to take money out of their Inherited IRA?

    As the owner of an inherited IRA, you may be required to either liquidate the account within five years of the December following the original owner's death or choose by September of the year following the original owner's death to take substantially equal payments over the longer of their or the original owner's life expectancy. An IRA Distribution Request Form should be included along with Inherited IRA Enrollment Kit, informing BlackRock of how your clients wish to take their distributions.

Transfer of Assets/Rollovers

  • What is the difference between a Transfer of Assets and a Rollover?

    A Transfer of Assets (“TOA”) is a process whereby retirement assets of the same type (i.e. Roth IRA to Roth IRA, Traditional IRA to Traditional IRA, etc.) are transferred directly from one custodian to another custodian.  The IRA owner completes & signs the transfer form from the receiving custodian, which is sent to the resigning custodian to request that they transfer the assets.  While a similar process, a Direct Rollover is when the account types are different (i.e. 401k to Rollover IRA, etc.).  An “Indirect Rollover” is when the IRA owner takes receipt of the assets from the resigning custodian (i.e. they send you a check) and then deposits them into their IRA at the new custodian.

  • How do I transfer my existing IRA to an IRA with BlackRock?

    To request a Transfer of Assets ("TOA") or Direct Rollover to BlackRock, you would complete the IRA Transfer of Assets / Direct Rollover Request Form.  Provide this, along with a statement from your current custodian, to BlackRock.  We will send a letter of acceptance to the current custodian requesting the assets.

    If you are in receipt of check already, you don’t need the Transfer form – you can include an IRA Rollover Certification Form to verify where the assets have come from.

    Note: If you are establishing a new IRA with BlackRock, you must include an IRA Application as well.

  • How long does this process typically take?

    On average, the Transfer of Assets ("TOA") / Direct Rollover can take 30 days or even longer (our current average turnaround time is 23 days, but may fluctuate during the busiest times of year).  We will send a follow up letter to the current custodian every 10 days until the assets are received.

  • What do I need to know about the Transfer of Assets ("TOA") and/or Rollover process?

    Check with your current custodian first! Sometimes they require an additional form, a medallion signature guarantee stamp, they may even ask for verbal confirmation, etc.  Anything missing can delay the request, and they will notify you (not us) of what’s missing.  The current custodian will not release the assets until their requirements are met, so it’s better to know at the beginning then a month later!

"Stretch" IRA

  • What is a "Stretch" IRA?

    A "Stretch" IRA is a wealth-transfer strategy that allows you to extend the period of tax-deferred earnings on the assets of an IRA by passing these assets to younger beneficiaries and decreasing the account's required minimum distributions (RMD). An IRA account owner names his spouse and/or beneficiaries considerably younger than himself. When these younger beneficiaries receive the inherited IRA, the remaining balance is paid out over their single life expectancies, effectively stretching out the length of time that withdrawals can be taken from that IRA. This extends the tax-deferred earnings of assets within an IRA beyond the lifetime of the person who set up the IRA.

  • What are the benefits of a "Stretch" IRA?

    Benefits of a "Stretch" IRA include: Tax-deferred income during a client's lifetime and for descendants by making strategic beneficiary designations for amounts not subject to RMD; Continued tax-deferred account growth over two or three generations.

  • How flexible is a "Stretch" IRA?

    Under IRS final regulations issued in 2002, potentially anyone can have a "Stretch" IRA:
    a. "Stretch" IRA planning is revocable during the client's lifetime. If your client's financial situation changes, IRA assets can be liquidated as needed.
    b. If the beneficiaries' situations change, they can take partial or full liquidations of assets once they inherit the IRA assets.
    c. Clients can change beneficiaries at any time. In most cases, such changes will not greatly affect their required minimum distributions.

  • What can a "Stretch" IRA strategy provide when matched with the right investment vehicle?

    A "Stretch" IRA strategy can provide:
    a. Cash flow to match a client's lifestyle and preserve wealth
    b. Continuing income for spousal security and independence
    c. A legacy that passes to the next generation

Other Retirement Accounts

  • What is a 401(k) plan?

    A 401(k) plan is a type of employer-sponsored retirement plan that allows a worker to defer income taxes on the money they invest. The employee elects to have a portion of his wages paid directly, or "deferred", into his or her 401(k) account. Typically, the employer who provides the plan will offer to match a percentage of deferred salary.

  • What is a 403(b) plan?

    Similar to the 401(k), 403(b) programs are employer-sponsored retirement plans where salary is deferred, pre-tax, into designated investments. Examples of those eligible for inclusion in a 403(b) are employees of non-profit organizations and public schools.

  • Can I open a 403(b) or 401(k) account with BlackRock?

    BlackRock does not offer 403(b) or 401(k) programs, however our products are frequently available within company retirement plans. You should contact your employer about any retirement programs offered to its employees.

Contact Us

If you have any questions please contact your BlackRock account:

Advisors: 877-ASK-1BLK (877-275-1255)
Investors: 800-441-7762

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For this and more information on BlackRock funds, please view a prospectus. The prospectus should be read carefully before investing.

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The information provided is not intended to be tax advice.  Investors should be urged to consult their tax professionals or financial advisors for more information regarding their specific tax situations.

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