A Traditional IRA may give you an immediate tax benefit because contributions are often tax deductible. With a Traditional IRA, up to $6,000 of tax deferred income may be placed in the IRA. Account owners may also contribute an additional $6,000 a year of earned income to a separate IRA for a non-income-earning spouse. Account owners who are age 50 or over are allowed to contribute an additional $1,000.

Taxable distributions from an IRA can be taken without penalty starting at age 59½ and must be started by April 1st of the year following the year the account owner reaches 72, unless you turned 70½ prior to January 1, 2020. If this is the case, you must begin taking distributions starting April 1st of the year following the age the account owner reaches 70½.

Basic eligibility requirements

• Starting in tax year 2020, there are no age limits
• You must have earned income or a spouse with qualified earned income
• No income limits
  
  

Account Minimums and Fees:

• There is no minimum initial deposit required to open an account
• There are no maintenance fees for retirement accounts

 

Commissions, service fees and exception fees still apply. See our commission and brokerage fees for details.

Need help deciding between a Traditional IRA or a Roth IRA? Try our IRA Selection Tool

 

Open a Traditional IRA

A Roth IRA’s tax advantages differ from the Traditional IRA. If eligible for this account, your annual contribution limits are the same but are not tax deductible. However, since annual contributions have already been taxed, these contributions will never be taxed again and earnings can grow tax free. Finally, the contributed funds can be withdrawn any time you wish and there are no required minimum distributions.

Withdrawals

Withdrawals of your contributions to a Roth IRA are tax-free anytime. However, withdrawals of earnings are only free from federal income tax, provided they meet the following requirements:

• You are purchasing your first home ($10,000 lifetime maximum)
• The Roth IRA has been in existence for at least five years
• You are age 59½ or older
• You become disabled or have passed away

What You Should Know About Converting Costs

You can convert a Traditional IRA to a Roth IRA at any time. You must note that when you convert to a Roth IRA, you must pay income tax on the otherwise taxable amount of the transfer. To maximize the benefits of conversion, the money to pay those taxes should come from a source outside the Traditional IRA you are converting. You may convert your Traditional IRA over several years to manage the tax consequences.

Account Minimums and Fees:

• There is no minimum initial deposit required to open an account
• There are no maintenance fees for retirement accounts

 

Commissions, service fees and exception fees still apply. See our commission and brokerage fees for details.

Need help deciding between a Traditional IRA or a Roth IRA? Try our IRA Selection Tool or view our IRA guide to find out which IRA is right for you.

Open a Roth IRA

Consolidate your retirement savings by rolling your old 401k over into one convenient, easy-to-monitor account. Our Rollover IRA process is fast and hassle-free. Rolling over assets from your old employer's plan into a TD Ameritrade IRA can help you better manage your portfolio and can provide access to a broad range of investments, while maintaining the tax-deferred status of your retirement assets.

A Rollover IRA is designed as a holding account for funds distributed from an employer's qualified retirement plan such as a 401k or 403(b). Moving funds into a Rollover IRA may allow the account owner to return the funds to another employer's qualified retirement plan in the future. To initiate a direct rollover from a qualified retirement plan, please contact your plan administrator.

Rolling over your old 401k into a TD Ameritrade IRA is free and there are no setup or maintenance fees. You'll also avoid costly cash distribution penalties and taxes if you were planning to cash out your accounts.

A rollover is not your only alternative when dealing with old retirement plans. Learn more about rollover alternatives.

Account Minimums and Fees:

• There is no minimum initial deposit required to open an account
• There are no maintenance fees for retirement accounts

 

Commissions, service fees and exception fees still apply. See our commission and brokerage fees for details.

Need Help with Your IRA Rollover?

A rollover specialist can:

• Help with the rollover process from start to finish.
• Contact your 401k administrator for you.
• Call 800-213-4583 to schedule a phone consultation.

Explore your options and financial effects of different choices with our 401k Rollover tool.

Open a Rollover IRA

A SEP (Simplified Employee Pension Plan) IRA is a retirement plan for self-employed individuals and small business owners and employees. SEP IRAs may not only be attractive to your employees, they can also be quick and easy to set up and administer for your small business. Consider a SEP if your business is new or has variable profits.

Key Features

• Simple administration
• No employer tax filing
• No specific annual funding requirements
• Flexible contributions

 

Eligibility Requirements for the Plan Sponsor

Employees must be age 21 or older, have earned at least $600 during the year and have worked three out of the five previous years. Employers may adopt less restrictive eligibility requirements so as not to exclude themselves from participating in the plan.

Set-Up and Funding

A SEP IRA must be established and funded prior to the employer's tax return due date, plus extension. Contributions can vary by year. All contributions are reported in the tax year received on tax form 5498.

Contributions

• 2020 Tax Year: 25% of the employee’s compensation or $57,000, whichever is less
• 2021 Tax Year: Lesser of 25% of compensation or $58,000

 

Account Minimums and Fees:

• There is no minimum initial deposit required to open an account
• There are no maintenance fees for retirement accounts

 

Commissions, service fees and exception fees still apply. See our commission and brokerage fees for details.

Employer must complete and retain Form 5305-SEP or other plan documents in their records. Employees should receive a copy.

Open a SEP IRA

A Solo 401k retirement plan offers the maximum retirement contribution (limits or levels) for self-employed individuals. This retirement plan has high contribution limits and flexible investment options.

The Solo 401k allows owners to make both employer and employee contributions, providing owners the ability to maximize their personal retirement contributions and their business deductions. Since there are no employees, there are no compliance testing requirements.

This is why a Solo 401k is most suitable for self-employed individuals or a business owner with no additional employees other than a spouse or a child. Consider this type of plan if your business has irregular profit patterns.

 

Key Benefits of Solo 401k Plans

• Discretionary funding
• Higher contribution limits
• Greater control over withdrawal timing
• Low administrative expenses

 

Eligibility Requirements for the Plan Sponsor

Eligible businesses include sole proprietorships, partnerships and incorporated businesses.

Set-Up and Funding

A Solo 401k must be established by the end of the employer's tax year and funded by the employer's tax return due date, plus extension. Contributions can vary by year.

Open New Account

A SIMPLE IRA is a retirement program that is easy-to-administer and salary-deferred. It is for employees with an employer match option. Consider a SIMPLE IRA if your business has steady income and your employees want to make contributions to a retirement plan. Employers with 100 or fewer eligible employees who did not maintain another retirement plan are eligible to establish a SIMPLE IRA.

Contributions

Each eligible employee can decide whether or not to participate and how much to contribute. Employer contributions are mandatory. Employee contributions are optional. Employees may contribute up to 100% of compensation or a maximum of $13,500 for tax years 2020 and 2021. Participants age 50 and over may contribute up to $16,500 for tax years 2020 and 2021.

The employer matches employee salary contributions dollar-for-dollar up of up to 3% of compensation (this can be reduced to 1% in any two out of five years), or a makes non-elective contribution of 2% of compensation for all eligible employees (including those who decide not to contribute for themselves). The compensation cap for determining the employer non-elective contribution amount is $285,000 for tax year 2020 and $290,000 for tax year 2021.

Withdrawals

Funds cannot be removed from the SIMPLE IRA until it has been established for at least two years. Withdrawals from a SIMPLE IRA after two years are still subject to federal income tax and/or a tax penalty.

Key Benefits of SIMPLE IRAs:

• Simple administration and low administrative costs. No maintenance or account fees
• No employer tax filings
• No IRS contribution testing
• Employees can make contributions
• Does not limit eligibility or employee access to funds

Eligibility Requirements for the Plan Sponsor

This plan is generally suitable for businesses with 100 employees or fewer. It's usually available when other tax-favored plans are not permitted.

Set-Up and Funding

A SIMPLE IRA must be established prior to October 1. The employer contribution (match or non-elective) must be made by the employer's tax return due date, plus extension. All contributions are reported in the tax year received on tax form 5498.

A copy of the IRS Form 5305-SA, and either 5305-SIMPLE or 5304-SIMPLE, must accompany the account application. Employer contributions are tax-deductible.

Open a SIMPLE IRA

Pension or Profit Plan accounts are tax-exempt trusts that can be set up by a company or self-employed individual for the purpose of retirement.

Examples of tax exempt trusts include:

• 401k, Keogh
• Profit Sharing Plans (PSP)
• Money Purchase Pension Plans (MPP)
• Defined Benefit Plan (DBP)
• Defined Contribution Plan and Retirement Trust

Client Profiles

• Cash, Cash and Margin, Cash and Option; Cash, Margin and Option

The Margin and Option approval on this account type is strictly specified in the Plan document provided by the Plan to TD Ameritrade.

Account Minimums and Fees:

• There is no minimum initial deposit required to open an account. Commissions, service fees and exception fees still apply. See our commission and brokerage fees for details.

Open New Account