All About
IRAs
Frequently Asked Questions
These frequently asked questions and answers are provided for general
information only and should not be cited as any type of legal authority.
They are designed to provide the user with information required to respond
to general inquiries. Due to the uniqueness and complexities of Federal
tax law, it is imperative to ensure a full understanding of the specific
question presented, and to perform the requisite research to ensure a
correct response is provided.
IRAs are the investment vehicles for IRA-based plans (e.g., SEP and
SIMPLE IRA plans. All SEP-IRAs and SIMPLE IRAs are subject to the
same investment rules as traditional IRAs. For more information on
these types of plans, see the Traditional/SEP IRA FAQs and
SIMPLE IRA FAQs.
For more specific questions, e-mail us at info@MidasFunds.com or
contact Midas Funds Shareholder Services at 1-800-400-MIDAS
(6432),
8 a.m.-6 p.m. Eastern Time.
How do I open a retirement account at Midas Funds?
How do I fund my new retirement account?
How do I make investments in this type of account?
What fees are charged for a retirement account?
Can I take a loan from my IRA? What are the rules?
What should I do if I contributed too much money into my IRA?
Will I be penalized?
If I took a loan from my retirement plan then rolled it over to an IRA,
can I make the loan repayments to my IRA?
Can I deduct IRA losses from my taxes?
How are Traditional IRAs and Roth IRAs the same?
How are Traditional IRAs and Roth IRAs different?
Can I contribute to a traditional IRA if I have other retirement plans?
How can I convert my traditional IRA to a Roth IRA?
Can my retirement accounts be combined?
What is AGI?
Can the 10% additional tax for an early withdrawal from an IRA be deducted
from the AGI as a penalty on early withdrawal of savings?
What is the Required Minimum Distribution (RMD)?
Can I withdraw more than the Required Minimum Distribution?
Am I required to take my Required Minimum Distribution from all of my accounts?
Which IRA accounts impose the Required Minimum Distribution rule?
Under what circumstances does the IRS require automatic income tax withholding?
How
do I open a retirement account at Midas Funds?
You
can open your retirement account by mailing the completed
application with your check, or by wire. You can also set up
Automatic Investment options with some accounts.
By mail:Simply
complete an application, enclose it with your check
drawn to the order of Midas Funds, and mail to
Midas Funds
P.O. Box 6110,
Indianapolis, IN 46206-6110.
By wire: Call
Midas toll-free at 1-800-400-MIDAS (6432), 8 a.m.-6 p.m.
Eastern time, to be assigned an account number and for wiring instructions.
You should carefully consider the investment
objectives, risks, charges and expenses of mutual funds before
investing or sending money. For a free prospectus, which contains
this and other important information about the Midas Funds, please contact
us or download
here. Read the prospectus carefully before you invest (or
send money).
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How
do I fund my new retirement account?
You
can make $100 minimum contributions to your IRA by telephone,
web, wire, mail or automatic investment.
Via telephone: Just
dial toll-free 1-800-400-MIDAS (6432) and follow the
prompts to speak with a Shareholder Services Representative
between 8 a.m. and 6 p.m., Eastern Time.
Via internet: Visit www.MidasFunds.com and
select “The
Midas Touch Account Access.”
By
mail: Simply detach
the FastDeposit form
from your statement and enclose it with your check drawn
to the order of Midas Funds.
By wire: Call
Midas toll-free at 1-800-400-MIDAS (6432), 8 a.m.-6 p.m.
Eastern time, to be assigned an account number and for wiring instructions.
IMPORTANT: Make sure you write your
account number and the contribution year on the check. If you
are funding your Rollover IRA, write ‘Rollover' on the
check or complete the Rollover IRA Designation Form to accompany
your check or stock for deposit into your Rollover IRA.
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How
do I make investments in this type of account?
Once
your retirement account is open and funded, you can
make your investments at any time via telephone or online through The
Midas Touch.
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What
fees are charged for a retirement account?
No
account service fees are charged for Midas Funds'
retirement accounts. Please refer to the Prospectus for
more details.
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Can
I take a loan from my IRA? What are the rules?
No,
you can not borrow from your IRA.
However, if you are 59-½ or younger, you can take a premature distribution
from your IRA once each 12-month period without penalty if
you replace it within 60 days. This is not applicable for
Roth IRAs.
If you do not replace it within the designated
time, you will be charged a 10% early withdrawal penalty.
If you do take a premature distribution, you should refer
to the instructions from IRS Form
5329 for guidance in filing your taxes.
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What
should I do if I contributed too much money into my IRA? Will
I be penalized?
You
have the option to remove excess funds contributed without
penalty in the in a particular year if you remove them before
the tax deadline for that year.
For example, Joe made a $7,000
contribution to an IRA on 2/15/09 for
the 2008 tax year. The deadline to remove the excess cash
without incurring the 6% penalty would be Joe’s tax filing
deadline, including extensions, for tax year 2008.
It is
recommended that you check with your tax advisor to determine
the best solution for your individual situation.
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Can the outstanding loan balance from a retirement plan be rolled over into an IRA and
the loan payments made to the IRA instead of the other plan?
IRAs (including SEP-IRAs) do not permit loans. Therefore, repaying a loan balance from one plan by transferring the loan balance and making loan payments to an IRA is not allowed. If this transaction was attempted, the loan would be treated as a distribution at the time of the attempted rollover.
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Can I deduct IRA losses from my taxes?
No - Neither IRA losses nor IRA gains are taken into account on a participant’s tax return while the IRA is on-going.
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How
are Traditional IRAs and Roth IRAs the same?
Each
IRA type allows owners to make contributions of up to the
applicable dollar limit of earned income each tax year. Assets
are not subject to income taxes while in IRA.
If the account
owner is under 59-½, assets can be withdrawn from
either IRA exempt from early withdrawal penalties (but not
taxes) if used to pay qualifying college expenses or certain
home purchases. Check out the Traditional
and Roth IRA Plan Comparisons page for more information.
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How
are Traditional IRAs and Roth IRAs different?
There
are two primary differences between Traditional IRAs and
Roth IRAs.
Contributions to Roth IRAs are never tax-deductible
but contributions to Traditional IRAs may be deductible or
non–deductible.
Roth IRAs offer tax-sheltered growth.
This means that investments grow free of federal income taxes.
An investor pays no federal income tax at all on qualifying
withdrawals.
Traditional IRAs offer tax-deferred growth.
This means that investments can grow free of federal income
taxes until withdrawals are taken. Check out the Traditional
and Roth IRA Plan Comparisons page for more information.
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Can I contribute to a traditional IRA if I have other retirement plans?
Yes, individuals can contribute to a traditional IRA whether or not they are covered by another retirement plan. However, they may not be able to deduct all of their contributions if they or their spouses are covered by an employer-sponsored retirement plan. [Note that contributions to a Roth IRA are not deductible and income limits apply.]
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How can I convert my traditional IRA to a Roth IRA?
A traditional IRA can be converted to a Roth IRA by:
Rollover - A distribution from a traditional IRA can be contributed to a Roth IRA within 60 days after distribution.
Trustee-to-trustee transfer - The financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA with another financial institution.
Same trustee transfer - As with the trustee-to-trustee transfer, the financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA. In this case, things should be simpler because the transfer occurs within the same financial institution.
A conversion results in taxation of any untaxed amounts in the traditional IRA. Also, the conversion is reported on IRS Form 8606, Nondeductible IRAs.
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Can
my retirement accounts be combined?
If
you have more than one retirement account, you can combine
them into one account or move a partial amount into another
account. You may want to keep deductible and non-deductible
contributions in separate accounts.
Exception: A SIMPLE IRA
can not be combined into ANY other type of account until after
two years from the date of your initial contribution.
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What
is AGI?
AGI is
the acronym for Adjusted Gross Income. It is the amount of
income earned before subtracting itemized deductions. You
can determine your AGI by
looking on line 33 of the Tax Form 1040.
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Can the 10% additional tax for an early withdrawal from an IRA be deducted from the Adjusted Gross Income as a penalty on early withdrawal of savings?
No, the additional 10% tax on early distributions from qualified retirement plans does not qualify as a penalty for withdrawal of savings.
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What
is the Required Minimum Distribution (RMD)?
By
federal law, Traditional, SEP, SIMPLE and Rollover IRA account
holders and participants in some qualified retirement plans
must begin taking distributions no later than April 1st in
the year in which they reach age 70-½. Roth IRAs
are not subject to RMD.
It is the minimum amount that you must withdraw each year.
Your RMD can
be calculated based on your single life expectancy or the
combined expectancy of you and your designated beneficiary.
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Can
I withdraw more than the Required Minimum Distribution (RMD)?
Yes,
you can withdraw more than the RMD.
It is advised that you consult with a financial advisor to
determine how much you should withdraw each year.
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Am
I required to take my Required Minimum Distribution (RMD)
from all of my accounts?
You
are required to take your RMD annually.
The total amount can be taken from either one IRA account or from multiple
accounts.
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Which IRA accounts impose the Required Minimum Distribution (RMD) rule?
Traditional, SEP and SIMPLE IRAs include this
ruling. Roth IRA does not.
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Under
what circumstances does the IRS require
automatic income tax withholding?
If
you, your surviving spouse or alternate payee (as defined
by the Qualified Domestic Relations Order) decide to take
a cash distribution from a 403(b)(7) or an IRA instead of
rolling over of the funds to a new account, 20% of the distribution
will automatically be withheld for federal income tax.
This
mandatory 20% withholding does not apply to rollovers, Required
Minimum Distributions, excess contributions or death. Additional
state taxes may also apply.
Caution: If distributions are not done in accordance with IRS regulations,
you may be subject to additional tax penalties.
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