Using Retirement Accounts

What distribution options are available for IRA accounts?

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

  • Normal: – You are age 59 ½ or older
  • Early with no known exception – You are under age 59 ½; a 10% early distribution penalty may be assessed by the IRS on your individual tax return
  • Early with exception – You're under age 59 ½ and an exception applies since you're taking a series of 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 – Along with a paper-form distribution request, please include a certified copy of the death certificate for the account owner
  • Removal of Excess Contribution – Requires a paper form; on the form, please indicate the amount you've over-contributed to your IRA, any applicable earnings and the tax year you want the funds distributed

How do I make an online contribution to my IRA or ESA account?

You have a number of ways to make a contribution into your IRA or ESA ShareBuilder account. Check 'em out below:

  • Electronic funds deposit from a checking or savings account
  • Payroll (direct) deposit
  • Mail a check or money order
  • Wire funds from your financial institution
  • Instant transfer funds from your Capital One 360 account

For step-by-step instructions, please refer to your Automatic Investment Plan or the Transfer Money section of the Accounts tab.

What is the deadline for making a contribution for an IRA account?

Even after you've rung in the new year, there is still a window of opportunity to make an IRA or ESA contribution for the previous year. Between January 1 and the tax filing deadline (generally April 15) you may designate contributions to an IRA or ESA account as being for the previous tax year. You might hear this referred to as a "carry back" contribution.

To do this, you have two options: set up an electronic deposit from your checking or savings account, or mail a check or money order. Instructions for both options are listed below.

Electronic Funds Deposit From Checking or Savings:

  1. Go to the Accounts tab, then Transfer Money, then Deposit & Withdrawal
  2. Select your bank account as the From Account and your IRA or ESA account as your To Account.
  3. Enter the amount of the deposit and a request date.
  4. Between January 1 and the tax filing deadline, you can select the year you would like to contribute to.
  5. Click Next, and then authorize your deposit request and select Submit.

Tip: If making a prior year contribution, setup of a next-day electronic deposit must be completed by 5:00 PM ET on the business day before the tax filing deadline. The money will be available in your cash balance on the business day following the request.


Mail a Check or Money Order:

  1. Go to the Accounts tab, then Transfer Money, then Deposit & Withdrawal
  2. Select the Checks tab, followed by the ShareBuilder account you want to deposit a check into.
  3. Select Mail a Check to your ShareBuilder Account.
  4. Click the View and Print link and print the form.
  5. Mail your check or money order and the completed mail a check form to the address listed on the form.

Tip: Be sure to check the prior year Annual Contribution box on the mail a check form before sending it to us. Also, print your ShareBuilder Account number on the check or money order being sent.

Fun Fact: All electronic deposits from your Automatic Investment Plan, recurring deposits or payroll deposit are designated as contributions for the year in which they are received.

How do I request a distribution from my IRA or ESA?

Looking to take a distribution from an IRA? We'll show you how. However (you knew there was a however coming), different rules, tax implications and exceptions can apply to IRAs, so we recommend that you consult a qualified tax advisor before taking an IRA distribution.

Follow these instructions to get started:

  1. Sign in at www.sharebuilder.com
  2. Go to Accounts > Transfer Money > Deposit & Withdrawal (sign in required)
  3. Choose your IRA in the 'From account' drop-down menu
  4. Confirm that the bank information for the 'To account' is correct
  5. Using the drop-down menu, select a distribution type
    • Based on your selected distribution type, you may be required to print and mail a distribution form to us. Please follow the instructions on the form.
  6. Follow the on-screen instructions for completing that type of withdrawal (all the way to the confirmation page).

Tip: If the instructions require you to print and mail (or fax) the distribution form, send it to:

Capital One ShareBuilder, Inc.
PO Box 4249
Seattle, WA 98194-0249

Fax: 888-389-1025

What tax documents will I receive if I own an IRA or ESA?

The tax forms for IRAs (Individual Retirement Accounts) and ESAs (Education Savings Accounts) are different than those of other account types. There are two form types used for tax reporting on an IRA or an ESA: the IRS 1099-R /1099-Q form and the IRS 5498 form.

IRS 1099-R or 1099-Q Form
The IRS 1099-R form or 1099-Q form is used to report any distributions that have been taken from an IRA or ESA. If you have taken a distribution, your 1099-R or 1099-Q form will be available online by January 31.

IRS 5498 Form
The IRS 5498 form is used to report any contributions that have been made to an IRA or ESA. This form is available online at the end of May and is not needed for filing your taxes.

Can I consolidate my ShareBuilder accounts?

Yes, you can consolidate your accounts if you transfer assets between 'like' accounts.

For example, if you have two Traditional IRAs with us, you can transfer securities or cash from one account to the other to consolidate your assets. If you meet all eligibility requirements, the following transfer types are permitted online:

  • Individual Account → Individual Account
  • Individual Account → Joint Account
  • Individual Account → Roth IRA Account (cash only)
  • Individual Account → Traditional IRA Account (cash only)
  • Individual Account → Education Savings Account (cash only)
  • Roth IRA Account → Roth IRA Account
  • Traditional IRA Account → Traditional IRA Account
  • Joint Account → Joint Account (same account owners)

Tip: If you are transferring cash between 'like' retirement accounts, it will not count toward your annual contribution limit, as we have already accounted for the original contributions (in other words, the initial cash deposited into the IRAs).

Can I fund my husband / wife's IRA?

You bet, as long as you meet the IRS guidelines for joint filers, regardless if one or both spouses work. Here's a little overview to help you get started:

The Non-Working Spouse

A non-working spouse can make a deductible IRA contribution of up to the current tax year's contribution limit as long as the couple files a joint return, and the working spouse has enough earned income to cover the contribution. It should be noted that the deductibility of the non-working spouse's contribution may be phased out as the couple's adjusted gross income (AGI) reaches a specific threshold provided that the working spouse is covered by a qualified retirement plan (via a job or self-employment). For the most up to date information on contribution limits and for help determining your AGI, please consult a qualified tax advisor or visit the IRS website.

Both Spouses Work

If both spouses work but neither participates in a qualified retirement plan, each can make deductible IRA contributions of up to the current tax year's contribution limit ($5,000 in 2012 – for a total of $10,000) – regardless of the couple's AGI level. The only limitation is that the couple must have earned income up to the combined contribution amount for the couple. For the most up to date information on contribution limits and for help determining your AGI, please consult a qualified tax advisor or visit the IRS website.

How do I correct an over-contribution in an IRA or ESA?

If you contributed too much cash into a ROTH IRA or an ESA, you'll need to remove the excess amount (along with any earnings if it's still prior to your tax-filing deadline).

To remove the excess contribution, please follow these steps:

  1. Sign in to your ShareBuilder account (you probably guessed that one)
  2. Go to Accounts > Transfer Money > Deposit & Withdrawal (sign in required)
  3. Select the From Account and To Account from the drop-down menus
  4. Select Removal of excess contribution as the Distribution Type.
  5. Print, complete and return the Distribution form by mail or fax using the instructions on your form
  6. Don't forget to have your signature notarized or Medallion Signature Guaranteed)

The penalties for an excess contribution depend on how soon you catch and correct the excess contribution. If the excess contribution (plus any earnings on that excess) is removed prior to your individual tax-filing deadline (including extensions), the contribution is not subject to a 6% penalty tax. The earnings you remove are treated as ordinary income and may be subject to a 10% early distribution penalty if you're under 59 ½. If the excess contributions aren't removed prior to your tax-filing deadline, the excess contribution is subject to a 6% penalty for each year the issue isn't corrected.

When am I required to begin taking distributions from my IRA?

Well that depends on what type of IRA you have. If we're talking about a Roth IRA here, then no required minimum distribution is, well, required. With a Traditional IRA, the year you reach the age of 70 ½, you have to start taking distributions from your IRA or face a potential penalty from the IRS. We recommend that you contact a qualified tax advisor who can help you determine the amount and best timing for your distributions.

Is there any way to correct an over contribution without penalty for my IRA?

Maybe. The penalties depend on how soon you catch and correct the excess contribution. If the excess plus any earnings on that excess is removed prior to your individual tax-filing deadline (including extensions), the contribution is not subject to a 6% penalty tax. That's the good news, as the earnings removed are treated as ordinary income and may be subject to a 10% early distribution penalty if you are under 59 ½. If the excess contributions are not removed prior to your tax-filing deadline, they are subject to a 6% penalty for each year that the excess contribution is not corrected.

How can I find my contributions year to date online?

You can view the running total of contributions for your ShareBuilder IRA or ESA Account by following the instructions below:

  1. Sign in to your account at www.sharebuilder.com
  2. Click on the Accounts tab > Portfolio > Account Balances
  3. Select the IRA or ESA you're looking for from the 'Account' drop-down menu

If you have any questions about IRA or ESA contribution limits, please refer to a qualified tax advisor.

How do I request a redesignation of a contribution?

If you've contributed to your IRA or ESA after January 1, but no later than the individual tax filing deadline (typically April 15), you can actually change the tax year of the contribution. This sweet process is called a redesignation.

To request a redesignation, please mail or fax us a letter with the following information:

  • Your full name
  • Your ShareBuilder account number
  • The account type (Traditional or Roth IRA or ESA)
  • The date, amount and tax year of each contribution to be redesignated
  • The letter must be signed by the IRA owner or responsible individual for the ESA (notarization is not required)

You can mail or fax your redesignation letter to:

Capital One ShareBuilder, Inc.
ATTN: ShareBuilder Accounts
PO Box 4249
Seattle, WA 98194-0249

Fax: 888-389-1025 (toll-free)

Tip: If April 15 falls on a weekend (Saturday or Sunday), the deadline will be the following Monday.

What if my beneficiaries change?

Updating your beneficiary information is pretty quick. Just follow these instructions:

  1. Sign in at www.sharebuilder.com
  2. Go to Accounts > Overview > Profile & Settings > Account Settings (Sign In required)
  3. Choose your IRA or ESA from the Account drop-down menu
  4. Under 'Account Beneficiaries', click View / Edit
  5. Use the provided fields to enter new beneficiaries, or you can click Edit or Delete link to make changes to existing beneficiaries
  6. When you're done editing your beneficiaries, click Submit

What is the difference between primary and contingent beneficiaries?

After you pass away, primary beneficiaries receive your assets from an IRA or ESA. A beneficiary is either a person or an entity. And the division between recipients must total 100%.

You'll need to name at least one primary beneficiary before you open an account. You also have the option of naming contingent beneficiaries in case the primary beneficiary passes away.

Tip: If an IRA owner is married, certain states require their spouse be at least a 50% primary beneficiary of your IRA. Please consult a tax advisor for additional information.

Beneficiaries and Percentage Allocation

When you open an IRA and ESA account, you`re required to designate estate beneficiaries. These individuals (or entities) will take ownership of account assets when you pass away.

You'll need to name at least one primary beneficiary, and the maximum number of beneficiaries you're able to have is six total between primary and contingent beneficiaries.

If your beneficiaries change over time, make sure to edit this and keep us up to date.

Tip: However you decide to slice it up, beneficiaries need to receive 100% of your total assets.

Do I need to select a tax year?

Yes. At the beginning of each calendar year, you have a set period of time where you can make contributions that count toward the previous tax year.

Between January 1 and your individual tax filing deadline (generally April 15) of the new year, you can designate whether any IRA/Roth/ESA contributions will count toward the previous or current tax year.

What is a 5498 form?

The 5498 is used to report any rollovers you made to this account within the calendar year or any contributions you made to this account by your individual IRS filing date (generally April 15). It is available at the end of May only if you made a contribution. It will be available online beginning with the 2012 tax year. This form is not needed for filing your taxes.

Who can be a beneficiary?

Any U.S. citizen or resident alien (with a tax identification number) is able to be a beneficiary of an IRA or ESA account. Also, you can designate entities – groups or organizations (such as a trust or charity) – to be a beneficiary. The entity you name needs to be based in the United States.

Tip: Be sure to include as much information as possible about the entity, especially its Tax ID#.

Who should I choose as a beneficiary?

Choosing beneficiaries can be an important part of estate planning. The beneficiaries you choose receive the proceeds of your ShareBuilder account when you pass away. For help choosing beneficiaries, please consult an estate planner.

If you're not sure who to choose, you can mark the primary beneficiary as your estate. To do this: enter your name in the 'Full Name' field, select My Estate in the 'Relationship' drop-down menu, and enter 100 in the '% Share' field. Upon your death, the proceeds of your account will be added to your estate for distribution by your will.

Tip: On the Account Overview page, you can update the beneficiary information.

What kind of federal withholding applies to my distribution?

So, you'll have to select one of the three options below when you take a distribution because the law says you have to pick a withholding preference for any distribution you take:

There are 3 options available for the Federal Withholding Election amount:

  • 10% of the gross distribution amount
  • No withholding or $0.00
  • An amount greater than 10% of gross distribution amount

Other solid sources of information about IRAs are IRS Publication 590 and the IRS website.

Tip: Gross distribution amount— this is the amount of funds you request before any applicable taxes and/or charges.

What are 1099 forms?

A 1099 is an IRS form that is used to report sales proceeds, dividends, interest and other types of income and proceeds that posted to your ShareBuilder account during the year. In short, transactions that are reported to the IRS. If your Individual, Joint or Custodial accounts meet the reporting thresholds, you will receive a substitute combined 1099 statement that reports one (or more) of the following types of 1099s:

  • 1099-B – Reports the proceeds from sales and other transactions involving the exchange of securities for cash
  • 1099-INT – Shows any interest that you may have earned
  • 1099-DIV – Reports any dividends and capital gains income you may have received from either your securities or money market fund

The 1099-R for IRAs and 1099-Q for ESAs are used to report any distributions taken during the tax year. We will send out these forms via mail by January 31.

To access your 1099 forms, follow the instructions below:

  1. Go to Accounts > Tax Center > 1099 Tax Forms (sign in required).
  2. Select your account and tax year
  3. Enter the last 4 digits of your SSN/ITIN for security verification
  4. Click Search to see a PDF version of your 1099

IMPORTANT TIP: If you own a custodial account, the parent or guardian for the child on the account may need the 1099 forms to file taxes for the minor.

While we cannot provide tax advice about your 1099 forms, a great source of information on 1099 forms is the IRS website. Also, you can contact a qualified tax advisor to help determine which method to use when calculating the cost basis for the gains and losses on your assets.

What are the Trustee Plan Document and Disclosure Statements?

The Trustee Plan Document and Disclosure Statement contain important information about your IRA or ESA. We recommend you take a look at the printable version, and keep a copy for your records: