How Do I Deposit Money Into My IRA Account?

IRA accounts allow you to save for retirement with tax-deferred growth. However, they have certain restrictions regarding contributions and withdrawals.

Traditional and Roth individual retirement accounts (IRAs) can be opened at any age; however, they tend to become most popular during prime earning years. Online IRA calculators can assist with figuring out how much to contribute.

Checking or Savings Account

Don’t forget that when searching for spare change under sofa cushions or behind car seats, you could also be getting help from the government for your Individual Retirement Account (IRA). If neither you nor your spouse have employer-sponsored retirement plans and meet certain criteria, use your tax refund as contributions towards last year’s IRA contribution.

IRAs provide an attractive tax-advantaged savings vehicle beyond your workplace 401(k). They allow you to invest in traditional and Roth savings accounts and CDs as well as nontraditional assets like gold and real estate that qualify.

Be mindful that investing involves risk, including potential loss of principal. Furthermore, if you transfer funds from another account into your IRA account, there may be taxes due. To learn more, visit our IRA accounts overview page.

CDs

Certificates of deposit (CDs), often offered through banks and credit unions, provide investors with a steady rate of interest at fixed intervals. As opposed to savings accounts or money market accounts, CDs tend to provide greater stability with increased returns than savings or money market accounts.

As your CD matures, banks typically provide various options: withdraw the funds or roll them over into another CD with either the same or different terms. There may also be an extended grace period during which time deposits or changes may be made to your account.

Before investing your savings into a CD, take an inventory of all of your accounts and consider when and how you might need the funds. In case of sudden emergencies, having funds available quickly is preferable to keeping it tucked away in an emergency fund in your checking or savings account. Or ask your employer about transferring a portion of each paycheck directly into an IRA to meet your savings goal while taking advantage of tax breaks associated with traditional or Roth IRAs.

EFTs

EFT stands for Electronic Fund Transfer and refers to any direct transfer of funds between two IRAs that is executed directly between financial institutions. An EFT transaction does not need to be reported or taxed by the IRS.

EFT transfers allow you to securely move money from your checking account into an IRA savings account or certificate of deposit held with a bank, potentially mitigating risk in case the market crashes. This strategy could also help mitigate loss incurred from market drops.

If you’re planning on investing in an IRA, find an online brokerage with low or no transaction fees and a wide variety of no-transaction-fee mutual funds and commission-free exchange-traded funds. Consider finding one that offers excellent customer support as well as educational resources if you’re new to investing.

Rollovers

If you want to transfer funds from a 401(k) or other workplace retirement plan into an IRA, there are various methods for doing it. Direct rollover is the preferred choice – in which the money flows directly from one account into the other – although indirect rollovers will still work provided they arrive in your new account within 60 days or face income taxes and penalties.

Consider also investing in an Simplified Employee Pension (SEP) IRA or SIMPLE IRA for easier and cheaper administration compared to traditional IRAs; these accounts usually offer lower returns than their traditional counterparts which allow stocks and bonds to be invested in.

If you are over age 73, required minimum distributions from your IRA or 401(k) account must be taken; keep this in mind when making decisions about where to move your funds. Also keep a record of each rollover transaction so you can document them come tax time.


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