How to Start a Traditional IRA
Opening a Traditional IRA is simple once you identify that you meet all of the requirements to succesfully begin the application process.
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Instructions
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To open an Traditional IRA you must meet the following requirements:1) You must be under 70 and atleast 18 years of age. 2) You must have earned income. Earned income is income that you have worked for, such as salary and wages. It does not include dividends and interest, or monies you receive from pensions.
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Verify all of your personal identification information and have it available to open the account. The information should include the following:1) Your Social Security number and driver's license number2) Your employer's name and address if you are employed3) Names and dates of birth for anyone to be designated as a beneficiaries4) Tax ID number or Date of Trusts for any trusts designated as beneficiaries
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Decide where you want to open your Traditional IRA account. You can open an account through a bank or brokerage house. If you are interested in holding stocks or bonds in your IRA, it may be wiser to open an account with your broker.
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Open an account and deposit money into your Traditional IRA. Be sure you understand the minimum initial deposits required for opening the account. Provide a checking or other account information for the funds to be drafted.
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Invest your funds once your check or electronic funds have been cleared. Decide the stocks or mutual funds you want to buy.
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Tips & Warnings
With the passage of the Economic Growth and Tax Relief Reconcilation Act of 2001, the amount you can contribute to your Traditional IRA has changed. You can now contribute $5,000 of 100% earned income per year-whichever is less.
If you are age 50 or older, you can contribute an additional $1,000 as a catch up contribution.
You can transfer assets from an IRA you hold at another financial services firm. This will be considered a transfer of existing assets.
The deadline is April 15h for the IRA to count for that tax year, and no extensions are allowed, even if you have an extension to file your taxes.
All funds withdrawn(including principal contributions) before 59 1/2 are subject to 10% penalty.
