Frequently Asked Questions
About Traditional IRAs and SEP IRAs





Traditional IRAs

Anyone under age 70½ with earned income can contribute to a traditional IRA. Contributions may be tax deductible, and taxes on earnings are deferred until you withdraw funds from the account, so your investments have the opportunity to compound faster.

Simplified Employee Pension (SEP) IRAs

A Simplified Employee Pension Plan, commonly known as a SEP IRA, is a retirement plan specifically designed for self-employed people and small-business owners. Its key features are highlighted below. When establishing a SEP IRA plan for your business, you and any eligible employees establish your own separate SEP IRA; employer contributions are then made into each eligible employee’s SEP IRA.

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.


What is a Traditional IRA?
How much can I put in a Traditional IRA each year?
Under what circumstances can I take an early distribution (before age 59½) from my Traditional IRA without an early withdrawal tax penalty?
Can I take money from my Traditional IRA for a home purchase?
I contributed too much money to my Traditional IRA. What can I do if the tax year deadline has lapsed?
I do not want to convert my entire Traditional IRA to a Roth IRA. Can I convert only a portion of it to minimize my incurred tax?
If my Traditional IRA contains non-tax deductible contributions, can I convert just that part of my savings that is deductible to avoid paying taxes?


What is a Traditional IRA?

A Traditional IRA enables individuals to save earned income for retirement until age 70-½. Contributions can be tax deductible and taxes on earnings are deferred until the funds are withdrawn upon retirement.

Traditional IRAs can be funded by an individual for his/her own savings, an employer on behalf of an employee or by rollovers received from qualified retirement plans.

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How much can I put in a Traditional IRA each year?

Individuals with earned income can contribute up to $5,500 for the 2014 tax year. Individuals age 50 and over are able to make an additional $1,000 catch up contribution from past earned income.

See "Traditional IRA Annual Contribution Amounts and Tax Deductibility" for more details.

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Under what circumstances can I take an early distribution (before age 59-½) from my Traditional IRA without an early withdrawal tax penalty?

You are able to take a distribution from your Traditional IRA for

  • a first-time home purchase ($10,000 lifetime limit),
  • higher education expenses,
  • non-reimbursed medical expenses up in excess of 7.5% of adjusted gross income,
  • disability expenses,
  • death expenses,
  • health insurance premium expenses while unemployed and
  • substantially equal period payments.

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Can I take money from my Traditional IRA for a home purchase?

Yes, you can withdraw funds from your Traditional IRA for a first-time home purchase for you and your immediate family members. You can take up to a lifetime total of $10,000 per individual and your distribution must be used within 120 days of receipt. It is advised that you consult with a financial advisor more details.

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I contributed too much money to my Traditional IRA. What can I do if the tax year deadline has lapsed?

You can take a distribution only for the excess contribution amount but you will be penalized 6% for each year the excess contribution remained in your Traditional IRA.

When you take withdraw your funds, you will need to file IRS Form 5329.

Caution: Depending on your age, your withdrawal may result in double taxation for the same funds.
It is advised that you consult with a financial advisor for more details.

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I do not want to convert my entire Traditional IRA to a Roth IRA. Can I convert only a portion of it to minimize my incurred tax?

Yes. Partial conversions to Roth IRAs are allowed as are conversions from a number of different Traditional IRAs.

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If my Traditional IRA contains non-tax deductible contributions, can I convert just that part of my savings that is deductible to avoid paying taxes?

No. You can not designate which portion of your account is converted, even if you do a partial conversion.

The distribution of your funds will include a proportional mix of tax deductible and non-tax deductible contributions from ALL of your Traditional IRAs.

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