How to Fund an IRA Account
Individual retirement accounts (IRAs) are beneficial when saving for retirement because taxes are deferred to a much lower tax bracket at retirement. Limits to IRA contributions are identified by the Internal Revenue Service based on a person's income. Online banking facilitates funding IRA accounts to meet the federal deadline when preparing taxes. Employees leaving a company also usually need to handle company-related 401(k) accounts and stock options. Transfers or rollovers to an IRA account retain the tax-deferred status while consolidating retirement investments.
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Instructions
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Online Banking
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1
Log on to your online banking account and click the "Transfers" option. Select the account that will fund your IRA (source account) from the directory of available accounts. Select your IRA account as the destination account (often described under "Where do you want to transfer money TO?").
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2
Enter the amount that you want to transfer into your IRA account. Click the "Submit" or "Transfer" button to initiate the transaction.
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3
Review the new balances in the source and destination (IRA) accounts to confirm. Click the "OK" button to complete the transfer.
Rollover from 401(k)
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4
Submit the forms to request a check for your 401(k) account payable to your IRA account. Make sure the check is not issued as directly payable to your name to minimize penalties when reporting these funds to the IRS.
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5
Complete the deposit forms if necessary for your IRA bank and deposit the check into your IRA account. Usually no endorsement is required since the rollover check is payable to the IRA account. If your bank requires endorsement, sign the back of the check, note the IRA account number and write "For deposit only."
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6
Retain copies of the forms and check for reference when preparing your taxes. Match this information against any tax reports issued by your 401(k) provider to ensure that the funds were classified as a rollover.
Rollover Company Stock
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7
Complete and submit the forms to roll over the company stock or stock options to your IRA account (forms are available from your company's human resources department).
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8
Write your IRA account number and financial institution and choose direct deposit to that account. Do not select the option to exercise the stock options and receive a check issued to your name, as you will need to pay capital gains taxes on this activity even though you will deposit the funds into your IRA.
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9
Confirm with your IRA institution that the funds were successfully transferred when you receive notification that the stock was transferred. Your shares of company stock will be added to your IRA stock portfolio.
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Tips & Warnings
Check with your tax adviser regarding limits and deadlines for funding an IRA for tax benefits.
