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.

All self-employed and small business IRAs (SEP IRAs and SIMPLE IRAs) are subject to the same investment rules as traditional IRAs. For more information on these types of plans, see Traditional and SEP IRAs and SIMPLE IRAs for Small Businesses.

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 downloadhere. 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 formore 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 2/15/11 for the 2013 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 2013.

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.

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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.

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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. 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 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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