ShareBuilder Account Types

What is an individual account?

An individual account is a taxable account (this means interest, dividends and capital gains and losses are reported to the IRS every year) for the benefit of one person.

To open an individual account, you must have reached the age of majority for your state of residence.

What is a joint account?

A joint account is a taxable account (this means interest, dividends and capital gains and losses are reported to the IRS every year) owned by two people.

ShareBuilder joint accounts are joint tenants with rights of survivorship—this means that when one of the account owners dies, sole ownership will be transferred to the remaining account owner without having to go through probate. For more information on the tax implications of this type of account, please consult a financial advisor.

To open a joint ShareBuilder account, both applicants must have reached the age of majority for their respective state of residence.

What is a Traditional IRA or Rollover IRA?

A Traditional Individual Retirement Arrangement (IRA) is an investment account geared for investors who want to build a nest egg for retirement. You're allowed to stash away a set amount every year. Plus, interest, dividends, and capital gains in the account aren't taxed until you withdraw the funds. As a bonus, some contributions you make into a Traditional IRA are tax-deductible.

A Rollover IRA 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 roll over.

Tip: For specific information about Traditional/Rollover IRAs and tax related questions, please consult a tax advisor and review IRS publication 590.

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What is a Roth or Conversion IRA?

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, and the amount that can be contributed each year is limited.

Roth IRA contributions are made after-tax, but earnings are not taxed, and neither are eligible withdrawals.

Tip: 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.

Tip: 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.

What is an Education Savings Account (ESA)?

An Education Savings Account (ESA – also known as a Coverdell ESA) is used to squirrel away funds for qualified education 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).

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

What is a custodial account?

It's never too early to start planning for the future. A ShareBuilder Custodial Account is an investment account created for the benefit of a minor. Custodial accounts are opened under the Uniform Transfer to Minors Act (UTMA), making the minor the owner of the account assets. However, a custodian (this is where you come in) must manage the account until the minor reaches the age of distribution for their state of residence. Earnings (up to a certain amount) will be taxed at the minor's rate.

Tip: State laws may restrict who can open a custodial account. Please consult a financial advisor for additional information on custodial account restrictions and tax reporting questions. Also, there can only be one minor and one custodian for each custodial account.

Why do you need this information?

We aren't asking because we're nosy. Securities regulatory authorities, the IRS, the USA PATRIOT Act and/or Capital One Investing, LLC actually require the following for any account owner:

  • Full name
  • Date of birth
  • Social Security number
  • Citizenship status
  • Employment information
  • Home address
  • Day and evening phone numbers
  • Email address