Individual Retirement Accounts (IRAs)

An IRA is a tax-advantaged investment vehicle used by individuals to set aside funds for retirement. There are several types of IRAs to consider – traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan (SIMPLE) IRAs. Regardless of type, an IRA cannot be held jointly – it must always be in an individual's name.

Traditional IRA

A traditional IRA 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 plan.

Those who received taxable compensation during the year (or, if they file a joint return, their spouse having received taxable compensation), and who are not age 70 ½ by the end of the year, are eligible to make contributions to a traditional IRA.

Note 1: A working spouse may contribute to their non-working spouse’s IRA.
Note 2: If you contribute to a traditional IRA via pre-tax dollars, all distributions are taxable.

Learn more about traditional IRA contributions and withdrawals below.

Roth IRA

A Roth IRA is a retirement account that provides tax-free growth and is funded with after-tax dollars. Note: While distributions may be tax-free when redeemed, contributions are not tax deductible since they are made with "after tax" dollars.

Refer to the IRS website for eligibility requirements in contributing to a Roth IRA, which is based on a person's Modified Adjusted Gross Income (MAGI) and tax filing status.

Note: Because you contribute to a Roth IRA on an after tax basis, all distributions from a Roth IRA generally are tax free if certain requirements are met.

Learn more about Roth IRA contributions and withdrawals below.

SEP IRA

A SEP IRA is retirement account set up under a written arrangement that allows business owners to make deductible contributions for their own and their employee's benefit to the SEP IRA (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.

Visit the IRS website for more information about SEP IRAs.

SIMPLE IRA

A SIMPLE IRA is a retirement account set up under a tax-favored retirement plan that certain small employers (companies with less than 100 employees) can set up for their employees. Employees can have their salary reduced by certain percentage each pay period in addition to the employer making matching or non-elective contributions.

Visit the IRS website for more information about SIMPLE IRAs.

Frequently Asked Questions About IRAs

General | Contributions | Withdrawals | Transfer/Rollovers

General IRA Questions

IRA Contributions

IRA Withdrawals

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

    You can withdraw money from an IRA at any time. However amounts 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, your contributions may always be withdrawn tax-free. However, any money exceeding the amount made in contributions withdrawn prior to your attainment of age 59 ½ and meeting certain other conditions may be subject to tax and 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 prior to your attainment of age 59 ½ and meeting certain other conditions may be subject to tax and 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 a Roth IRA, you must either take the entire balance by the end of the fifth year after the original owner’s death or take distributions starting in the year after the original owner’s death in minimum amounts based on your own life expectancy.

  • 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 your inherited IRA?

    Yes, you are required to take money out of your inherited IRA. If you inherit a traditional IRA, when you must take money out of it depends on whether the original IRA owner died before his or her required beginning date, the April 1 of the year following the year the original IRA owner turned or would have turned 70 ½. If the owner died before his or her required beginning date, you may either take the entire balance by the end of the fifth year after the original owner’s death or take distributions starting in the year after the original owner’s death in minimum amounts based on your own life expectancy. If the IRA owner dies on or after his or her required beginning date, you generally must take distributions in minimum amounts based on the longer of your own or the original owner’s life expectancy.

    If you are the beneficiary of a Roth IRA, you may either take the entire balance by the end of the fifth year after the original owner’s death or take distributions starting in the year after the original owner’s death in minimum amounts based on your own life expectancy.

    Keep in mind that a spouse can treat an IRA inherited from his or her spouse as her own IRA and that different rules apply if the owner of the inherited IRA is not an individual. For more information about when you must take money out of an inherited IRA, consult IRA Publication 590B at www.irs.gov, or consult a tax advisor.

IRA 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 than a month later!

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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