What is an IRA?

Types of IRAs

Whether you’re rolling over your existing 401(k), 403(b), Individual Retirement Account (IRA) or opening a new IRA, understanding the types of IRAs and selecting the right one for you gives you the opportunity to customize your retirement savings strategy to fit your retirement goals. Traditional, Roth, and SEP IRAs offered by U.S. Bank and U.S. Bancorp Investments, and our U.S. Bank Heritage IRA, each have different contribution limits, distribution rules, and tax implications. Read on to learn more.

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Traditional IRA

  • Offered by U.S. Bank and U.S. Bancorp Investments
  • You pay no income tax until you withdraw funds
  • Contributions are tax deductible if your income falls below the annual limit of $63k (single), or $101k (married filing jointly)
  • Yearly contribution limited to $5,500 if under 50, $6,500 if 50+
  • If your income is above $63k (single) or $101(k) (married filing jointly), you may be able to contribute your after-tax income (i.e., contributions are not tax deductible)
  • You can roll over your previous employer’s 401(k) without taxes or penalties

Roth IRA

  • Offered by U.S. Bank and U.S. Bancorp Investments
  • You make contributions with after-tax earnings if your annual income is up to $120k (single) or $199k (married filing jointly)
  • You may be able to access funds tax-free prior to retirement once you meet holding requirements
  • There is no required minimum distribution, so you can potentially grow your savings beyond the Traditional IRA requirement to start withdrawing funds by age 70 and a half

U.S. Bank Heritage IRA

  • May help you take advantage of tax benefits of a Traditional or Roth IRA while retaining the level of control offered by a trust
  • Includes provisions that may help you provide for your current spouse, while leaving the balance to children from a previous marriage upon your spouse’s passing
  • Allows you to control payments to beneficiaries

SEP IRA

  • Offered by U.S. Bank and U.S. Bancorp Investments
  • A Simplified Employee Pension (SEP) IRA allows small businesses to provide their employees a retirement plan
  • Employers make tax-deductible retirement contributions on behalf of eligible employees, including the business owner
  • Employees establish their own Traditional IRA, and the employer deposits SEP contributions into it
  • Employers may contribute up to 25 percent of an employee’s compensation to a SEP IRA
  • SEP IRAs are a great option for self-employed individuals

Open a Traditional, Roth or SEP IRA online today through U.S. Bancorp Investments

Want to know more about your IRA options? Contact us

Automated Investor

Invest for retirement online with smart technology and guidance from investment professionals with Automated Investor by U.S. Bancorp Investments. Open a Traditional, Roth, or SEP IRA today.

Learn more about Automated Investor

Funding your IRA

401(k) and 403(b) rollover into an IRA

  • You can authorize a transfer of funds from your previous employer’s 401(k) or 403(b) directly into an IRA to continue tax-deferred retirement savings without penalty or taxes. Some fees may apply.
  • You can also request a distribution check payable to you. The amount will be subject to a 20% federal withholding tax. You will need to roll the amount into an IRA or other qualified retirement plan within 60 days to avoid further penalties and taxes.

Rollover into an IRA

Transfer an IRA

  • Transferring an existing IRA directly into another IRA is the simplest way to fund your new account. You authorize the IRA transfer with your current financial services provider and specify the new account where you’d like to deposit your funds. Some fees may apply, but there are no limits to the number of times you can transfer IRA funds each year.
  • You may also roll over your existing IRA by requesting a distribution check and depositing that amount into your new IRA. You must deposit the funds within 60 days to avoid paying income tax and possible penalties on the withdrawal. You can only complete one rollover within each consecutive 12-month period.