Open a Traditional or Rollover IRA

Forms and Requests Received Will be Processed in 24-48 hours of Quest Receiving the Form.

The Traditional IRA, often called a Rollover IRA, can be used by anyone who earns or whose filing-jointly spouse earns “taxable compensation,” until age 70 ½. The Traditional IRA is widely known for its tax advantages, as the account owner does not pay taxes upfront, and the contributions can be tax deductible. There are no income limits on who is eligible to enroll in a Traditional IRA, but not everyone can potentially receive a tax deduction. All growth within the account is tax deferred but you must pay taxes upon distribution. You can take distributions at any time, however, a 10% penalty is applied if you take a distribution before you are 59 1/2. Age 59 1/2, distributions are penalty free but taxed as current income. You also must begin taking RMDs, or required minimum distributions, at age 70 1/2 and can no longer make contributions. In 2020, the contribution limit for the Traditional IRA is $6,000 and also allows for a $1,000 “catch-up” for those over the age of 50.

Click here to see the pros and cons of opening a Traditional IRA

Answers to some of the most frequently asked investing questions (FAQs) about Traditional IRAs

Can I buy real estate with a Traditional IRA?
Buying real estate with an IRA or a solo 401k certainly can be done! You just need to find a custodian that will hold non-traditional or ‘alternative’ investments.

Can I use a Traditional IRA to buy a house?
You can use a Traditional IRA to buy a house.

How do I use a Traditional IRA to buy a house?
You first need to find a custodian that will hold non-traditional or ‘alternative’ investments and establish an IRA with them. You will then locate the house you want to purchase, and typically, your custodian will require you to sign some internal forms. After making sure the contract is in the name of the IRA, your custodian will purchase the property for you on behalf of your IRA.

Can a non-working spouse contribute to a Traditional IRA?
Yes. A nonworking spouse can make a contribution to an IRA as long as the couple files a joint tax return, and the working spouse does have earned income that is equal to (or more than) the total amount of the nonworking spouse’s contribution plus the working spouse’s contribution.

How much can a non-working spouse contribute to a Traditional IRA?
A nonworking spouse can contribute up to $6,000 for 2020, or $7,000 if age 50 or older.

What is the last day to contribute to a Traditional IRA?
The last day to contribute to a Traditional IRA is usually the tax filing deadline. For 2020, it is April 15, 2021.

How do you set up a self-directed Traditional IRA?
You will first need to find the custodian you like! Once you have picked a good custodian, you will complete some paperwork (typically an application) and in a few days, your account will be open.
*Processes will vary by custodian.

Check out this video to see the most common questions about Traditional IRAs answered

2020 Contributions:

  • $6,000 | $6,000
  • $1,000 catch-up (Age 50+)

REMEMBER: You must qualify to contribute to a Traditional IRA. Annual contribution limits apply to the combined Traditional and Roth IRAs of an individual.

What are the benefits of a Traditional IRA?

  • Tax Deductible Contributions
  • No Income Limits on Participation
  • Bankruptcy Protection
  • Inheritance – you can pass assets onto beneficiaries after death.

It’s easy to invest with a Self-Directed Traditional IRA!

  • Open a Traditional IRA account at Quest
  • Fund your account by rolling over an old 401K, transferring money from another IRA, or making a contribution
  • Invest in what you know best!
  • Submit Your Forms: All forms can be mailed or faxed to any of our locations or emailed to NewAccounts@QuestTrust.com

    Income Limits:

    Tax Filing Status 2020 Tax Year
    Single or Head of Household  $65,000 – $75,000
    Married Filing Jointly  $104,000 – $124,000
    Married Filing Seperately  $0 – $10,000

    Claiming a Tax Deduction for your IRA Contribution

    Your Traditional IRA contributions may be tax-deductible.

    The amount of deduction is dependent on your gross income (MAGI) and if you or your spouse is covered by a retirement plan at work.

    For single tax filers, the phase out range for 2020 is  $65,000 – $75,000.

    For married couples filing jointly, where one spouse’s IRA contribution is covered by a work retirement plan, the phase out range for 2020 is $104,000 – $124,000.

    For married couples filing separately, where the individual is covered by a work retirement plan, the phase out range for 2020 is $0-$10,000.

    For spousal IRA contributions, the deduction is phased out if the couple’s income in 2020 is $196,000-$206,000.

  • 2018 Traditional IRA Distribution Rules

    • A Traditional IRA Distribution is taxed as income for the tax year of the distribution.
    • If you withdraw a distribution before the required age of 59.5, you are subject to a 10% early withdrawal penalty.
    • Distributions are optional between the ages of 59.5 and 70.5. Once you hit 70.5, Required Minimum Distributions (RMD) begin.
    • The required minimum distribution is calculated:

    (Fair Market Value of IRA) ÷ (life expectancy of IRA account holder)