Investment/Retirement and IRA FAQs
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Investments/Retirement FAQs
Q: What is a mutual fund?
A: A mutual fund is simply a collection of stocks, bonds or other securities owned by a group of investors and managed by a professional investment company. The managers of these funds diversify their holdings by buying a wide variety of investments within the stated fund category to reach an investment objective of Current Income, Future Growth, or a combination of Income and Growth. Mutual funds allow investors to benefit from professional management and asset diversification, for which a fee is charged.
The advantage of buying a mutual fund as opposed to a single security is that you get instant diversification. This means that rather than “putting all your eggs in one basket”, by purchasing the stocks or bonds of just one company or entity, investing in a mutual fund allows you to instantly purchase the securities of many companies or entities at once.
Q: What is asset allocation?
A: How you have your funds, or assets, allocated will have a big impact on the potential risks and rewards of your investments. The study of asset allocation really refers to diversifying your investments, in other words not "putting all of your eggs in one basket."
Money market accounts, stocks, bonds and international investments respond differently to changing investment environments. By allocating your money among several investment categories - with different objectives, growth patterns and time frames - you may protect your money against temporary downturns in any one market. However, even proper asset allocation will not guarantee a profit or protect you from loss.
Q: How can I save on taxes by using investment products?
A: There are numerous investments that offer tax benefits. Here are just a few and the tax benefit they offer:
- Traditional IRAs may allow you to deduct your contribution on your current tax bill.
- A Roth IRA offers after tax contributions with access to your funds in the future with no income tax due.
Variable and Fixed annuities are an additional way to invest on a tax-deferred basis.
- Municipal bonds provide federally tax-free income, and some bonds are double tax-exempt, meaning that you pay no federal or state tax on their earnings. Some stock mutual funds specialize in minimizing taxes, because they concentrate on offsetting their gains with their losses, don't trade as frequently and attempt to make most capital gains long-term gains, which are taxed at a more favorable rate.
- Federal agencies offerings may be state tax-exempt as well.
For a comprehensive review of your personal tax situation, always consult with a tax advisor. Neither PrimeVest, nor any of its North Shore Bank representatives may give legal or tax advice.
Q: I have funds in a retirement plan at a former job. How do I roll it over?
A: Your current employer will provide you with a form that will allow you to roll over your retirement plan into an IRA. Because Tax penalties can be assessed if not handled properly, we recommend that you check with North Shore Bank or your tax advisor before initiating this type of transaction. Learn More.
Please note:
- The product is not a deposit or other obligation of the Bank and is not guaranteed by the Bank.
- The product is not insured by FDIC or any agency of the United States or the bank.
- There is investment risk associated with the product, including the possible loss of value.
Still have questions? We can help.
IRA FAQ’s
Q: How much can I contribute to a traditional IRA?
A: View contributions for a Traditional IRA.
Q: When may I use my IRA assets?
A: You may use the funds you contribute to your IRA at any time. However, if you are younger than 591/2, the IRS imposes a 10% early distribution penalty on the funds withdrawn unless you qualify for an exception. Exceptions include withdrawals for the following reasons:
- Disability
- Qualifying medical expenses
- Qualifying education expenses
- Qualifying first-home purchase ($10,000 lifetime limit)
- Death
- Receipt of assets in equal payments over your life expectancy
- IRS levy distribution
Please contact your tax advisor for further information.
Q: Am I ever required to take funds from my traditional IRA?
A: Yes. Your first distribution must be taken for the year in which you reach the age of 70½. This first distribution, and only this first distribution, can be delayed until the year following the year you reach age 70½; however, it must be taken by April 1. If you choose this distribution option, you must take another distribution by year's end - one for the year you turned 70½ and one for the current year.
Q: What makes the Roth IRA different from the traditional IRA?
A: Roth IRA is different from a traditional IRA in two ways:
1) The money you contribute to a Roth is never deductible for tax purposes. Because it has already been taxed, the principal amount is never subject to taxes or IRS penalties.
2) Not only does the money you contribute to a Roth IRA grow tax-deferred, if you do not withdraw earnings from the IRA for at least five years and you have reached age of 59½, those earnings become tax-free.
Q: How much can I contribute to a Roth IRA?
A: View contribution limits for Roth IRA’s.
Q: Can I move funds from my traditional IRA into a Roth IRA? What rules apply?
A: Yes, as long as you fall within certain guidelines and follow these specific rules:
- You must pay taxes on the funds for the year they were converted.
- You must complete the conversion within 60 days.
Effective January 1, 2010: (TIPRA) the Tax Increase Prevention & Reconciliation Act of 2005:
- Removes the previous Modified Adjusted Gross Income (MAGI) limit of $100,000.00
- Removes the previous requirement that, if married, you must file a joint tax return
- Allows taxes on amounts converted in 2010 to be paid over the next 2 years (2011 & 2012)
Because Tax penalties can be assessed if not handled properly, we recommend that you check with a North Shore Bank Investment Advisor or your tax advisor before initiating this type of transaction.
Q: Am I ever required to take funds from my Roth IRA?
A: No. Unlike with traditional IRAs, which require distributions to begin at age 70½, your earnings can continue to grow in a Roth IRA until you need them.
Q: Can I make a contribution to both my traditional and Roth IRA accounts for the same year?
A: Yes, as long as you follow IRS guidelines and your total contribution to both IRA types does not exceed 100% of earned income up to contribution limit. Learn more.
Please note:
PRIMEVEST Financial Services, Inc. is an independent, registered broker/dealer and registered investment adviser. Member FINRA/SIPC. Securities and insurance products offered by PRIMEVEST:
- The product is not a deposit or other obligation of the Bank and is not guaranteed by the Bank.
- The product is not insured by FDIC or any agency of the United States or the bank.
- There is investment risk associated with the product, including the possible loss of value.
View PRIMEVEST privacy policy and other important information.
Advisory services may only be offered by Investment Adviser Representatives in connection with an appropriate PrimeVest Advisory Services Agreement and disclosure brochure as provided.
Investment Executives are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with residents of other states will only be made upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside of the United States.
Mutual Funds are sold by prospectus. Investors should carefully consider the funds investment objectives, risks, charges and expenses before investing. The prospectus contains this and other information about the investment company. A prospectus is available from an Investment Executive. Please read the prospectus carefully before investing.
Still have questions? We can help.
- E-mail us.
- 414.964.3390 or Toll Free 800.236.4672.
(8:30 a.m. until 5:00 p.m. CST, Monday through Friday)
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