An individual retirement account (IRA) is a long-term saving account that allows you to contribute earned income to your retirement.
If you have a 401(k) or other employer-sponsored retirement account, then an IRA can help you save more money for your future. These accounts also provide the opportunity for you to contribute to retirement savings if you don’t have access to an employer-sponsored plan.
When an IRA may make sense for you
An IRA may be a fit if you:
Are ready to start saving for retirement
Have one or more 401(k) accounts from previous employers and would like to consolidate your retirement savings
Want to save more for retirement, in addition to your employer-sponsored 401(k)
Don’t have access to a retirement plan through an employer
How to open a Guideline IRA
You can learn more about our IRAs by visiting our website. Once you’re ready to get started, select the “Set up your IRA” button.
You can then follow the step-by-step process where you’ll enter the following:
Personal information
Portfolio selections
Beneficiaries
How to make contributions to your IRA
Before you can make IRA contributions, you’ll need to connect a bank account. Here’s how to complete this process:
Click on Contributions from the main menu of the dashboard. If you have more than one type of account with Guideline, select IRA in the drop-down that appears.
Click the link to add a bank account.
Choose how you would like to add your banking information, via instant verification or manually using micro-deposits. Then, follow the prompts to complete the specific process. Note that if you elect to add your banking info manually, there may be a 2-4 day waiting period for verification.
If you need to make changes to your bank account information, you can do so under Settings > Personal settings > Bank accounts.
Once your bank account has been added for contributions, you’ll be able to select your preferences for the deposits into your account at Guideline within the Contributions page.
If you would like to make contributions for the current year, you will select this tax year, your elected contribution amount, and the frequency (one-time or monthly).
You can choose to apply your contributions to the previous tax year (carryback contributions) if you are making those contributions by the tax filing deadline, generally April 15 of the current year.
IRA contribution limits
With an IRA, you can contribute up to the annual IRS limits. This limit can change each year, depending on cost-of-living adjustments.
You can keep track of how much you contribute throughout the year and how far away you are from reaching the limit by reviewing the “projected year contributions” timeline in your dashboard.
Once you reach the annual limit for a given tax year, contributions for that tax year will be suspended.
Please note, contribution limits apply across all IRAs in your name to which you may be contributing. If you have other IRA accounts, we cannot monitor external contributions. Therefore, it’s important to monitor your overall contribution limits. However, 401(k) contribution limits are independent from IRA limits.
IRA tax implications to consider
The IRS requires you to have eligible taxable compensation to be eligible to contribute to an IRA. Eligible compensation includes taxable wages, tips and other compensation reported in Box 1 of Form W-2, commissions and self-employment income.
Your IRA contribution for the year cannot exceed the eligible compensation amount you receive for the year. For example, if your eligible compensation is only $4,000, your contribution is limited to $4,000, regardless of the IRS limit.
Note that your traditional IRA contributions may not be fully deductible if you or your spouse participate in another retirement plan at work.
Roth IRA contributions might be limited if your income exceeds a certain level.
Visit the IRS site to learn more about IRAs.
The information provided herein is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. You are advised to consult a qualified financial adviser or tax professional before relying on the information provided herein.