IRA/ESA Accounts

A Traditional Individual Retirement Arrangement (IRA) is one of the investment options available to help individuals prepare for retirement.

For tax year 2008, customers with earned income may contribute up to $5,000 per year (or 100% of their earned income, whichever is less) to their IRAs, and individuals age 50 or older may contribute up to $6,000 annually.

For tax year 2009, customers with earned income may contribute up to $5,000 per year (or 100% of their earned income, whichever is less) to their IRAs, and individuals age 50 or older may contribute up to $6,000 annually.

Contributions to a Traditional IRA may be tax-deductible, depending on eligibility, and owners are required to begin taking distributions upon reaching age 70½.

Note: Contribution limits indicate the total amount a taxpayer may annually contribute to their combined IRA accounts. For specific or tax-related questions about Traditional IRAs, please consult a tax advisor and review IRS publication 590.

A Rollover IRA is an account that is used to hold assets that were previously held in an employer’s retirement plan, like a 401(k). There is no limit on the amount you can rollover.

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A Roth Individual Retirement Arrangement (IRA) is one of the more recent investment options available to help individuals prepare for retirement. To open and contribute to a Roth IRA, customers must meet certain eligibility requirements set by the IRS.

For tax year 2008, customers with earned income may contribute up to $5,000 per year (or 100% of their earned income, whichever is less) to their IRAs, and individuals age 50 or older may contribute up to $6,000 annually.

For tax year 2009, customers with earned income may contribute up to $5,000 per year (or 100% of their earned income, whichever is less) to their IRAs, and individuals age 50 or older may contribute up to $6,000 annually.

Contributions are made on an after-tax basis, and earnings generated by a Roth IRA may not be subject to taxes upon a qualified distribution.

Note: Contribution limits indicate the total amount a taxpayer may annually contribute to their combined IRA accounts. For specific or tax-related questions about Roth IRAs, please consult a tax advisor and review IRS publication 590.

A Roth Conversion IRA is an account that is used to hold assets converted from a Traditional or Rollover IRA.

Note: The amount converted from a Traditional or Rollover IRA is subject to regular income taxes in the year of conversion. For specific or tax-related questions about Roth Conversion IRAs, please consult a tax advisor and review IRS publication 590.

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An Education Savings Account (ESA - also known as a Coverdell ESA) is a trust created for the purpose of providing for the qualified educational expenses of the Designated Beneficiary. Contributions are made on an after-tax basis, and earnings generated may not be subject to taxes (upon a qualified distribution).

For tax years 2002 - 2010, you may contribute up to $2,000 to an Education Savings Account on behalf of the Designated Beneficiary each year. Contributions may be made by any individual whose modified adjusted gross income for the year is less than $110,000 (subject to phase-out starting at $95,000) for those filing singly or $220,000 (subject to phase-out starting at $190,000) for individuals filing a joint return. Corporations and other entities (trusts, etc.) may also contribute to an ESA and are not subject to any income requirements.

Note: Contributions made to an Education Savings Accounts do not provide a tax break or tax deduction for the contributor.

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As of November 1, 2008, we are pleased to inform you that ShareBuilder no longer has an administration charge for IRA and ESA account types. This applies to all IRA and ESA accounts, regardless of when your account was opened.

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The maximum yearly IRA contribution is defined by the IRS. Due to recent changes to the tax law, the maximum amount varies from year to year. Also, individuals over the age of 50 can make a "Catch Up Contribution", over and above the regular maximum yearly contribution.

Important: If you own multiple IRAs, the total of all contributions to all IRAs may not exceed this annual contribution limit.

Important: If your total earned income for a tax year is less than the maximum contribution amount, you may not contribute in excess of your total earned income for that year.

Lastly, payment of the pricing program's monthly subscription and trade commissions count toward the annual contribution limit.

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The maximum yearly contribution for an ESA (Education Savings Account) as established by the IRS is $2,000. If multiple ESAs have been opened for the benefit of the Designated Beneficiary, the total of all contributions to all ESAs may not exceed this annual contribution limit.

In addition to the maximum contribution amount, there are income limits for those individuals that are making the contributions (such as parents, grandparents, friends, etc.). Corporations, and other entities may make contributions to an ESA without being restricted by these income limits:

For the most up to date information and/or help determining your ability to contribute to an Education Savings Account, please contact your tax advisor.

Note: Payment of the pricing program's monthly subscription and trade commissions count toward the annual contribution limit.

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IRA/Roth IRA:

You have the option of selecting from the following choices as the reason for making your withdrawal request

• Normal: You are age 59 1/2 or older.
• Early with no known exception: You are under age 59 1/2. A 10% early distribution penalty may be assessed by the IRS on your individual tax return.
• Early with exception: You are under age 59 1/2 and an exception applies because you are taking a series of substantially equal periodic payments based on your life expectancy.
• Disability: Please include a copy of a physician's statement or letter from the Social Security office confirming your disability. (Requires form to be filled out)
• Death Beneficiary Distribution: Please include a certified copy of the death certificate for the account owner with your request, and ShareBuilder will contact you if any additional paperwork is required. (Requires form to be filled out)
• Removal of Excess Contribution: You have over-contributed to your IRA and have decided to remove the excess amount. Designate the excess contribution amount, applicable earnings and tax year associated with the contribution you wish to have distributed. (Requires form to be filled out)

ESA:

The user has the option of selecting from the following choices as the reason for making the withdrawal request

• Normal: The distribution will be used for education expenses. View additional information about qualified and non-qualified education expenses.
• Disability: Please include a copy of a physician's statement or letter from the Social Security office confirming your disability. (Requires form to be filled out)
• Death Beneficiary Distribution: Please include a certified copy of the death certificate for the account owner with your request, and ShareBuilder will contact you if any additional paperwork is required. (Requires form to be filled out)
• Removal of Excess Contribution: You have over-contributed to your ESA and have decided to remove the excess amount. Designate the excess contribution amount, applicable earnings and tax year associated with the contribution you wish to have distributed. (Requires form to be filled out)

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