Frequently asked questions

An investor can contribute to an IRA account by transferring funds online from a bank or brokerage account, sending a check, or completing a wire transfer. For more information about ways to make a deposit to an account, see the Help topic, Contribute to an IRA account. 

An investor is allowed to contribute 100% of earned income up to the annual contribution limit. View IRA Contribution Limits and Deadlines to learn more. 

Requesting a distribution online may allow for faster access to funds. Complete the online form to get started. The request should be processed and on its way in 3–5 business days.

This is a common myth about retirement investing. An investor may still contribute to an IRA even if they participate in an employer-sponsored retirement plan. However, they may not be able to deduct a Traditional IRA contribution if they exceed certain income limits. View IRA Contribution Limits and Deadlines to learn more.

This depends on your own financial situation. For example, a credit card balance at 19 percent may be a more urgent issue than a student loan at 5 percent. We encourage you to speak with your Financial Consultant or a financial advisor for more information.

A Roth IRA conversion is the process of moving assets from a Traditional, Rollover, SEP, or SIMPLE IRA to a Roth IRA. The account owner can convert all or a portion of their IRA. If the account owner is considering converting a SIMPLE IRA, the account owner should be aware that a SIMPLE IRA cannot be converted to a Roth IRA during the 2 year period beginning on the date on which the account owner first participated in any SIMPLE IRA plan maintained by their employer. The deadline to complete a Roth IRA conversion is December 31 of each year. Please note: The recharacterization of Roth Conversions is no longer permitted due to the Tax Cut and Jobs Act. Read more if you are thinking about a Roth IRA conversion. For questions specific to your situation, please speak to your tax advisor. A Roth IRA conversion can be requested by using the online Roth IRA Conversion Request Form.

General:

• Must be 18 years of age or older with taxable compensation
• Must have Modified Adjusted Gross Income (MAGI) under certain thresholds (see ‘Single Filers’ or ‘Joint Filers’ for additional information). If your MAGI exceeds the MAGI limitations to contribute to a Roth IRA, you can still contribute to a Traditional IRA, but your Traditional IRA contributions may not be tax deductible if you (or your spouse) is covered by a employer sponsored qualified retirement plan and your MAGI exceeds certain thresholds. Additionally, Traditional IRA contributions may be converted to a Roth IRA at any time (taxable amounts converted to a Roth IRA will be subject to ordinary income taxes).
• To apply online, you must be a U.S. citizen or resident
• Can open and make a contribution to your Roth IRA for a tax year at any time during the tax year or by your federal tax return filing deadline (not including extensions). This date is generally April 15 of each year. Applications postmarked by this date will be accepted.

Single Filers:

• If an investor’s MAGI is $146,000 or less in 2024, they may be eligible to make a full contribution. If their MAGI is between $146,000-$161,000 in 2024, they may be eligible to make a partial contribution. An investor is not eligible to make a contribution if their MAGI is $161,000 or more in 2024.

Married, filed jointly:

• If a couple’s combined MAGI is $230,000 or less in 2024, they may be eligible to make a full contribution. If their combined MAGI is between $230,000-$240,000 in 2024, a couple may be eligible to make a partial contribution. They are not eligible to make a contribution if MAGI is $240,000 or more in 2024.
  
  

Note:

Modified adjusted gross income (MAGI) is used to determine whether an individual qualifies for certain tax deductions and other tax benefits. Most notably, it is used to determine how much of an individual's IRA contribution is deductible (if the individual or their spouse is covered by a workplace retirement plan) and whether an individual is eligible to contribute to a Roth IRA.

The amount an investor can contribute to a Roth IRA depends on various factors, such as Modified Adjusted Growth Income (MAGI) and tax filing status. View Roth IRA Contribution Limits and Deadlines to learn more.

General:

• Must be 18 years of age or older with taxable compensation
• If you or your spouse is covered by an employer sponsored qualified retirement plan, (such as 401(k) plan, including plans sponsored by self-employed individuals) and your MAGI (Modified Adjusted Gross Income) exceeds certain thresholds, the deductibility of your Traditional IRA contributions for federal income tax purposes may be reduced or eliminated.
• To apply online, you must be a US citizen or resident
• Can open and make a contribution to your Traditional IRA for a tax year at any time during the tax year or by your individual federal tax return filing deadline (not including extensions). This date is generally April 15 of each year. Applications postmarked by this date will be accepted.

Single Filers:

• If taxpayer participates in an employer-sponsored retirement plan, and taxpayer’s MAGI is $77,000 or less in 2024, taxpayer may be eligible to deduct the entire contribution. If taxpayer’s MAGI is more than $77,000 but less than $87,000 in 2024, taxpayer may be eligible to deduct part of the contribution. Taxpayer is not eligible to make a tax deductible contribution if MAGI is $87,000 or more in 2024.

Joint Filers:

• If taxpayer participates in an employer-sponsored retirement plan, and taxpayer’s MAGI is $123,000 or less in 2024, taxpayer may be eligible to deduct the entire contribution. If taxpayer’s MAGI is more than $123,000 but less than $143,000 in 2024, taxpayer may be eligible to deduct part of the contribution. Taxpayer is not eligible to make a tax deductible contribution if MAGI is $143,000 or more in 2024.
• If taxpayer does not participant in an employer-sponsored retirement plan, but taxpayer’s spouse does, then the MAGI limits are different. If taxpayer’s MAGI is $230,000 or less in 2024, taxpayer may be eligible to deduct the entire contribution. If taxpayer’s MAGI is more than $230,000 but less than $240,000 in 2024, taxpayer may be eligible to deduct part of the contribution. Taxpayer is not eligible to make a tax deductible contribution if MAGI is $240,000 or more in 2024, and taxpayer’s spouse participates in an employer-sponsored retirement plan.

Determining if an investor can deduct all or part of their Traditional IRA contribution is based on whether they (or their spouse) have a retirement plan at work, their tax filing status, and modified adjusted gross income (MAGI). To learn more about the amount of your contribution that can be deducted, use the IRA Selector or view IRA Contribution Limits and Deadlines, and speak with your tax advisor.

• Must be 18 years of age or older
• To apply online, must be a US citizen or resident
• Generally, an investor cannot roll over assets from an employer's plan into an IRA unless they have changed jobs, retired, or are over age 59½
• An investor may also roll over into a Roth IRA if they have made after-tax contributions to a Roth 401(k) or Roth 403(b), or want to convert a pre-tax 401(k) to a Roth IRA

• Rollovers and transfers are two different ways of moving funds
• A direct rollover is the movement of assets from an employer's qualified retirement plan, such as a 401(k) to an IRA. Assets are sent directly from the plan administrator to the IRA custodian. A direct rollover is reportable on tax returns, but not taxable.
• A transfer is the movement of IRA assets held by one trustee or custodian to an identically registered IRA held by another trustee or custodian, without taking physical receipt of the funds. Account transfers are not reportable on tax returns and can be completed an unlimited number of times per year.

Whether you changed jobs or retired, you have options about what to do with your old 401(k), 403(b), or other former employer plan.

1. You can leave assets in a former employer's plan.
2. You can consolidate former plan assets to a current employer's retirement plan.
3. You can consolidate former plan assets into an IRA.
4. You can cash out.

Learn more about your rollover options.

1. A Traditional, Rollover, or Roth IRA account must first be opened with E*TRADE, unless account assets will be rolled over into an existing IRA. 
   
   
2. Contact the benefits administrator of the former employer and complete all distribution forms required to initiate the direct rollover. 

For rollovers via check:

Instruct the plan administrator to issue a distribution check made payable to: 

Morgan Stanley, FBO <Name>

If rolling over to a Rollover IRA:

Make sure the Rollover IRA account number is included on the check.

If rolling over to a Roth IRA:

Make sure the Roth IRA account number is included on the check.

If rolling over to a Rollover and Roth IRA, separate checks must be issued for each.

Instruct the plan administrator to mail the check to:

E*TRADE from Morgan Stanley

PO Box 484

Jersey City, NJ 07303-0484

If the plan administrator sends you the check, simply forward it along with an IRA Deposit Slip to E*TRADE at the address above.

For securities rollovers:

Instruct the plan administrator to forward securities to DTC Clearing 0015, Code 40.

Or, if the plan administrator wants to mail certificates, make sure the certificates clearly indicate the E*TRADE Rollover or Roth IRA account number and are registered to the following:

Morgan Stanley, FBO <Name>

Instruct the plan administrator to mail the certificates to:

E*TRADE from Morgan Stanley

PO Box 484

Jersey City, NJ 07303-0484

Learn more about direct rollovers.

A rollover generally takes 4–6 weeks to complete. However, this timeframe depends on how long the former employer or plan administrator takes to process the transaction.

Yes. Any amounts rolled over directly from a pre-tax employer plan into a Traditional or Rollover IRA are reportable, but not taxable. The former employer will send IRS Form 1099-R, which reports the plan distribution. E*TRADE will then send IRS Form 5498 by May 31 of the following year, reporting the incoming rollover to offset the distribution. However, if a pre-tax qualified plan is rolled over into a Roth IRA, this transaction is taxable and must be included in taxable income. Consult with a tax advisor for more information.

Generally, assets from an employer’s plan cannot be rolled over unless the participant has changed jobs, retired, or is over age 59½. Check with the employer's plan administrator to confirm whether assets may be transferred while still employed.

• Must be over age 59½
• Must already have an existing E*TRADE Traditional, Roth, Rollover, SEP, or SIMPLE IRA
• If an individual does not have an IRA at E*TRADE, open one first and then upgrade online to an E*TRADE Complete IRA
• All withdrawals via check writing, debit card, and Bill Pay will be considered IRA distributions and reportable on IRS Form 1099-R. Federal and state income tax will not be withheld from these payments.
• Residents of Connecticut are not eligible for an E*TRADE Complete IRA, since they are subject to mandatory Connecticut state tax withholding on IRA distributions.
• Residents of Michigan born on or after 1/1/1946 are subject to mandatory Michigan state withholding tax. A resident of Michigan must provide Form MI W4-P to opt out of state withholding before requesting an upgrade to an E*TRADE Complete IRA.

An upgrade to an E*TRADE Complete IRA is only available after an individual reaches age 59½.

No. There are no minimum check amount requirements with an E*TRADE Complete IRA.

Yes. Learn more about RMD.

Yes. Form 1099-R (available by January 31st of each year) is generated for reportable distributions taken from all IRA accounts. Tax records and other electronic documents can be accessed online through the Tax Center.

• Must be the beneficiary of an IRA or qualified retirement plan
• Generally, spouse beneficiaries can roll over assets into an IRA of their own, or a Beneficiary IRA. If funds are rolled into a Beneficiary IRA, a spouse beneficiary may need to begin taking annual required minimum distributions, depending on their age and the age of the original account holder.
• Generally, non-spouse beneficiaries, trusts, and estates may roll over assets into a Beneficiary IRA. Annual required minimum distributions will need to be taken, or the account closed by the end of the 5th year following the original account holder’s death.
• Withdrawal options for beneficiaries can be complex. Call the Beneficiary Services team at 1-888-402-0653 for assistance.

A Beneficiary IRA can be opened by completing the Beneficiary IRA Application, and send the application in with a certified or original death certificate to move the funds from the decedent’s account to the new Beneficiary IRA. The online transfer form can be used to initiate the transfer of funds from another firm to E*TRADE.

Learn more about your choices for inherited IRAs.

An individual does not have to withdraw all of the funds immediately. After the assets have been transferred to a Beneficiary IRA, the beneficiary has multiple options. One option is to withdraw a certain amount of money each year, based on life expectancy. An individual has until December 31st of the year following the death of the original IRA owner to start taking distributions. Another option is to forgo annual distributions, but withdraw all funds within five years. Use the Inherited IRA tool to see guidelines for withdrawal and determine the amount of any annual withdrawals.

Learn more about your choices for inherited IRAs.

There are several options available to Inherited IRA beneficiaries. The options depend on whether the beneficiary is a spouse or non-spouse, and how old the original account holder was when they passed away. Use the Inherited IRA tool to help understand the options.

Yes. If the child is under age 18 and has earned income. The IRA for Minors account is opened by the minor's guardian (natural or legal guardian) who must sign the application. Additional requirements are the minor must be a U.S. citizen or resident with a valid U.S. address.

Learn more about IRAs for Minors.

• Eligible participants are under age 18
• The minor must have earned income for the tax year in which a contribution is made
• A guardian (natural or legal guardian) establishes, trades, and maintains the account for the benefit of the minor. Only one guardian is allowed per account.
• The minor must be a US citizen or resident
• IRAs for Minors must be established by the tax filing deadline (without extensions) for the tax year for which the qualifying contribution(s) will apply. This date is generally April 15 of each year. Applications postmarked by this date will be accepted.

The current IRA contribution limit is 100% of earned income, or $7,000 for 2024 ($6,500 for 2023), whichever is less.

Yes, recurring contributions can be set up to a child’s IRA, up to the annual maximum contribution limit.

Determining if a child can deduct all or part of Traditional IRA contribution is based on various factors. To learn more about the amount of your child’s contribution that can be deducted, consider using the IRA Selector or view IRA Contribution Limits and Deadlines, and speaking with your tax advisor.

There are no annual IRA fees and no account minimums for E*TRADE IRA accounts. Transaction fees, fund expenses, brokerage commissions, and service fees may apply.

• A SEP-IRA is a retirement account for self-employed individuals and owners of small businesses
• Employees must meet all of the following eligibility requirements:
  • Age 21 or older
  • Annual compensation of $600 or more
  • Have worked for the company in at least three of the past five years

Yes. However, since an individual will be considered an active participant in an employer-sponsored retirement plan, some or all of their personal IRA contributions may not be deductible. Refer to the Contribution Limits & Deadlines table for more information.

If a business owner receives compensation as personal income, such as a sole proprietor or unincorporated partnership, the annual contribution limit is up to 20% of their net adjusted self-employed income or net adjusted business profits.

All employees age 21 or older who have worked for the business owner in three of the past five years and earn $750 or more for the year must be included.

Yes, a business owner can use less restrictive participation requirements than those listed by the IRS, but not more restrictive ones. For example, IRS participation requirements state that an employee must have worked for the company in at least three of the past five years. Employers are permitted to decrease or remove this requirement; however they are not permitted to increase it. This also applies to self-employed business owners.

Generally distributions from a SIMPLE IRA are subject to the same distribution rules as a Traditional IRA. SIMPLE IRA distributions may be taken at any time and are generally taxable in the year distribution occurs. Withdrawals taken prior to age 59½ are subject to an additional 10% early distribution penalty. However, if a distribution from a SIMPLE IRA is taken during the 2 year period beginning on the date on which the participant first participated in any SIMPLE IRA plan maintained by their employer, the 10% early distribution penalty is increased to 25%.

• Savings Incentive Match Plan for Employees (SIMPLE) IRA is a retirement account for self-employed individuals and business owners with fewer than 100 employees
• Any employee expected to earn at least $5,000 this year, and who earned at least $5,000 during any two years preceding the current calendar year (whether or not consecutive)

No. If a business owner currently maintains another employer-sponsored retirement plan, they may not establish a SIMPLE plan for the same tax year when contributions were made to that plan.

It depends. If a non-elective employer contribution option is chosen, contributions have to be made to all eligible employees whether they choose to participate in the plan or not. However, if a matching contribution option is chosen, contributions are only made to employees who are participating in the plan (i.e. making salary deferral contributions) for that year.

Yes. An individual may have both accounts. However, since an individual will be considered an active participant in an employer-sponsored retirement plan, some or all of the contributions to a Traditional IRA may not be deductible. Refer to the Contribution Limits and Deadlines table for more information.

• Available to self-employed individuals with no additional employees other than a spouse, including sole proprietors, partnerships, LLCs, corporations, and "S" corporations
• Salary deferrals can be split between the pre-tax Individual 401(k) account and the after-tax Roth Individual 401(k) account
• Discretionary profit sharing contributions must be made to the pre-tax Individual 401(k) account

• Individual 401(k) allows for both, salary deferral and profit sharing contributions
• Salary deferrals can be split between the pre-tax Individual 401(k) account and the after-tax Roth Individual 401(k) account
• Discretionary profit sharing contributions must be made to the pre-tax Individual 401(k) account

Yes. However, total annual employee contributions cannot exceed the 401(k) contribution limits ($23,000 for 2024 or $30,500 if age 50 or older for 2024). Other restrictions and rules may apply in this situation; consult your tax and legal advisor.

If employees are hired, generally, they would have to be included in the plan, which will add more complex plan administration rules, expenses, and may cause the need to terminate the Individual 401(k) plan. A business owner may want to consider other retirement plans if planning on hiring employees in the future. Consider using the Small Business Plan Selector Tool to see other options.

Yes. Generally, each self-employed partner will be able to open a separate Individual 401(k) plan.

Business owners are generally exempt from filing IRS Form 5500 if the Individual 401(k) plan has less than $250,000 in assets at the end of the year. Plans with $250,000 or more in assets at the end of the year are generally required to file Form 5500.

A vesting schedule determines how rapidly the employer contributions in a participant's account become non-forfeitable (i.e. belong fully to an employee).

• A Profit-Sharing Plan is a retirement account for self-employed individuals and owners of small businesses
• Employees are eligible based on the following criteria:
  • For plans with no vesting schedule:
    • Any employee age 21 or older and
    • Has worked for the company at least for two years
  • For plans with a vesting schedule:
    • Any employee age 21 or older and
    • Has worked for the company for at least one year

Any employee age 21 or older working for the company at least for two years must be included in the plan if the plan does not offer a vesting schedule. For plans with a vesting schedule, any employee age 21 or older and working for the company for at least one year must be included.

Yes, an annual IRS Form 5500 filing is required for a Profit-Sharing Plan.

• Designed for business owners and plan sponsors with an established qualified retirement plan, using a third-party plan administrator, seeking to utilize E*TRADE for a robust online trading platform.
  
  A plan sponsor has two options:
  • Open one pooled account where the plan trustee(s) or administrator directs the investment activity for the entire plan. Enrolled plan participants have no control over this account. Funds are pooled in the same account and all investments are owned at the plan level.
  • Open separate accounts and authorize each enrolled plan participant or the plan administrator to direct the investment activity. The account will be established for the benefit of ("FBO") one plan participant and may not pool plan assets from other participants in the same account.
• This account may be opened at any time. The deadline to fund the account is plan specific.
• Plan participants must be 18 years of age or older and U.S. citizens or residents with a valid U.S. address

Yes. One pooled account may be opened where the plan trustee or administrator directs the investment activity for the entire plan. Enrolled plan participants would have no control over their own individual accounts.

Margin trading is not allowed, however, options level one (writing covered calls) may be requested if allowed by the Plan document.

The plan's trustee(s) will automatically receive trade confirmations and account statements showing the plan’s activity. The plan trustee(s) can also request that E*TRADE provide the plan participant(s) duplicate copies of trade confirmations and account statements.

No, E*TRADE will not provide recordkeeping or tax reporting. This must be done independently by the trustee(s) or a third-party plan administrator.