IRA Frequently Asked Questions Branch Locator

Find answers to frequently asked questions about IRAs. If you have additional questions or would like to open an IRA with Fifth Third, please visit a Fifth Third Banking Center near you.

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Traditional IRAs

You can set up and make contributions to a traditional IRA if you meet the following requirements:

  • You (or, if you file a joint return, your spouse) received taxable compensation during the year
  • You were not age 70½ by the end of the year.

You can have a traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan.

Contributions may be affected by your Modified Adjusted Gross Income (MAGI). Please see your tax advisor or the IRS website for rules and additional details.

Generally, contributions for a given tax year can be made no later than your tax filing deadline. For 2013, the deadline is April 15th, 2014.

Your ability to deduct your Traditional IRA contribution is based on your Modified Adjusted Gross Income and whether you or your spouse participates in an employer sponsored retirement plan anytime during the year. See IRS Publication 590 or your tax advisor for additional information

Beneficiaries of an IRA have the option of allowing their portion of the deceased person's IRA to continue growing tax deferred. However, depending on the IRA owner's age at the time of death, the beneficiary may be required to take annual distributions from their inherited IRA based on their own life expectancy or deplete their inherited IRA no later than 12/31 of the year that contains the fifth anniversary of the IRA owner's death. To find out how this applies to your situation, see IRS Publication 590 or your tax advisor

You can consolidate all of your Traditional IRAs, including Rollover IRAs, SEP-IRAs and SIMPLE IRAs (once the 2 year holding period has passed) into one Traditional IRA. This can be done in two ways:

  1. 60-Day Rollover – You can take a distribution from your current IRA and roll to your new IRA within 60 calendar days of receipt of the funds. NOTE: Only one 60 day rollover is allowed per 12 months per distributing IRA account. This transaction will be reported, but not taxable, on your tax return for the year in which the distribution occurred.
  2. Non-reportable Trustee-to-Trustee Transfer – this transaction is initiated by the receiving institution. They coordinate with your current IRA firm to move your IRA assets to the new firm. This action is not reported on any tax form and doesn't count against your ability to do a 60-day rollover with these same funds.

You can convert Traditional IRA assets to a Roth IRA at any time. The transaction may be totally or partially taxable depending on whether you have any after-tax funds in any Traditional IRA at the time of conversion. Also, if you have any taxes withheld from the conversion amount, the withholding amount may be subject to a 10% penalty if you are under the age of 59 ½.

You can distribute all or a portion of your traditional IRA assets at any time. Generally, distributions are taxed at your current tax rate. In addition, a 10% premature distribution penalty may apply if you distribute IRA assets before you reach age 59½. There are some additional exceptions to this penalty. See IRS Publication 590 or your tax advisor for information.

You must begin taking an annual Required Minimum Distribution(RMD) no later than April 1 of the year after the year you reach age 70 ½. If fail to do so, you may have a 50% excise tax on the amount not distributed. Your financial institution can help you determine the amount of your annual RMD.

In general, distributions from a traditional IRA are taxable in the year distributed. If you have basis in your Traditional IRA (after-tax contributions that you have recorded on IRS form 8606) then a portion of your distribution may not be taxable. See IRS Publication 590 or your tax advisor for additional information.

Roth IRAs

Generally, you can contribute to a Roth IRA if you have taxable compensation and you are within the Modified Adjusted Gross Income (MAGI) rules. Please see your tax advisor or the IRS website for rules and additional details.

Contributions may be affected by your Modified Adjusted Gross Income (MAGI). Please see your tax advisor or the IRS website for rules and additional details.

You can make contributions to a Roth IRA for a given tax year no later than your tax filing deadline. For 2013, the deadline is April 15th, 2014.

Yes, funds from either a Traditional, SEP, or SIMPLE IRA can be converted into a Roth IRA. As of 2010, the eligibility restrictions that had prevented certain taxpayers from being able to convert to a Roth IRA were eliminated. Roth conversions are now available to all individuals. Generally, you are taxed at your current tax rate on the amount of the conversion. Some exceptions may apply. See your tax advisor for information.

Distributions of annual contributions are tax free at any time. Distributions of conversion amounts are tax-free at any time and may be penalty-free. A distribution of earnings before age 59 ½ and satisfying your 5 year aging date is generally subject to tax and penalty. Certain distributions can be made tax and/or penalty-free. (See IRS Publication 590 or your tax advisor for additional information).

You are not required to take distributions from your Roth IRA at any age. This allows you to pass your Roth IRA down to your beneficiaries after your death. In most cases, they will be able to take distributions totally tax-free. Beneficiaries of Roth IRAs do have requirements to distribute assets from their Inherited Roth IRA depending on the age of the Roth IRA owner when they died. See your tax advisor for additional information

Rollover IRAs

A Rollover IRA is a Individual Retirement Account that is designed to segregate assets rolled from your former employer's qualified retirement plan (pension, profit sharing, 401(k), etc) into an IRA that is separate from your other Traditional IRA funds. This may allow you to roll the funds from the Rollover IRA back into another qualified employer retirement plan at a later date. In addition, rolling over to an IRA allows you to keep your savings tax-deferred and typically offers more investment choices.

Contact your former employer or plan administrator to request the paperwork to begin your distribution. A Fifth Third Bank representative will guide you through the process to make it as seamless as possible.

Fifth Third Bank does not charge any annual custodial and maintenance fees for a Rollover IRA. There are no additional costs when you hold a CD IRA to maturity or a Money Market Savings IRA.

  • Leave your money in your former employer's retirement plan where it can continue its tax-advantaged status and grow for retirement. If you have less than $5,000 in the plan, your employer may request to have the funds transferred out of the plan upon termination of employment, or thereafter.
  • Roll your money over to a Fifth Third IRA where it can continue its tax-advantaged status and grow for retirement. An IRA will allow you to consolidate all of your IRA balances, making it easier to manage your investments
  • Roll the money to your new employer's retirement plan, where it can continue its tax-advantaged status and grow for retirement. Your new employer's plan may not accept rollovers in, so be sure to check the plan's rules.
  • Take your money out of the retirement plan, pay IRS taxes and possible penalties, and keep the balance for yourself. This is the most costly option, as you may lose a considerable portion of your asset

Typically, you are only able to take money out when you reach normal retirement age, leave the company, become disabled, or if your employer terminates the plan. Please consult with your current/former employer to see when you can withdraw your assets.

You may be able to take a portion of your money out of your plan at work and leave the rest in, but not all plans allow this.

If you are required to take all of your money out of the plan, you can roll it all over to an IRA, then take the portion that you need out of the IRA. Depending on what you need the money for, you may qualify for a waiver of the penalty tax if you take the money from an IRA rather than directly from your plan at work.

If you have access to other money, you may want to avoid taking money out of the plan. Even a small withdrawal can have a drastic effect on the growth of your retirement savings. See an example of the impact of time on your existing balance

Check with your company to find out if the plan will allow you to continue making payments after you leave the company, or whether you are required to repay the balance of your plan before you can roll over the remainder.

If you decide to take your money out of the plan and don't repay the loan before doing so, the amount of the unpaid loan is added to your income for the year (which may be taxable) and may also be subject to IRS penalties, depending on your age

Even if no portion of your rollover is taxable, the IRS requests that you must report it on your tax return. You will receive two tax forms — an IRS Form 1099-R reporting that a distribution from the employer plan occurred and an IRS Form 5498 reporting that you made a rollover contribution to your IRA

It is worth consulting with your tax accountant before you take any cash out of the employer retirement plan, as you may have taxes withheld from the balance.

If you roll over your money directly from your company plan into an IRA, then there are no taxes that you owe. Please instruct your company plan to make the check payable to Fifth Third and, upon receipt, the check will be deposited to your Rollover IRA account.

Fifth Third Bank provides a vast array of investment choices from which you can choose — including FDIC-insured Rollover IRA CDs and Money Market Savings, and more. You can consult with a Fifth Third Bank representative to find out what options fits you.

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Fifth Third Bank does not provide tax advice; consult your tax advisor.