What Is a Non Conduit IRA?


A conduit IRA is used to transfer money between one IRA or 401k plan and another. Non-conduit IRAs include traditional or Roth IRAs that act as individual retirement accounts. These plans allow you to invest in a variety of investments and may constitute an important part of your retirement plan.

Traditional IRA

A traditional IRA allows tax-deductible contributions to the account. In exchange for this benefit, you pay income tax on all money withdrawn from the account. You may invest in a wide range of investments, from mutual funds to annuities, stocks, bonds and even precious metals or real estate.

Roth IRA

A Roth IRA is an individual retirement plan that only allows after-tax contributions. You must hold the account for at least five years or until your age 59 1/2, whichever comes later, but you may withdraw investment gains after this time income tax-free. Additionally, you may withdraw all of your contributions from the account prior to age 59 1/2, without incurring a penalty for the withdrawal.


A SIMPLE IRA is an employer-sponsored IRA that allows contributions to the plan on a pretax basis. The SIMPLE acronym stands for Savings Incentive Match Plan for Employees. The employer must match your contributions to the account on a dollar-for-dollar basis up to 3 percent of your annual compensation. Alternatively, the employer may contribute a flat 2 percent of your annual compensation regardless of your contribution.


A SEP is a Simplified Employee Pension set up by your employer or yourself, if you are self-employed. You (if you are self-employed) or your employer contributes money to the SEP account. Contributions are not required each year, but when contributions are made all employees receive the same contribution either as a flat contribution amount, or a percentage of their annual contribution or as profit sharing. Contributions cannot exceed the lesser of 25 percent of the employee's annual compensation or $49,000 for 2011. Whatever the contribution formula, all employees must receive the same consideration.

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