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IRA CONTRIBUTIONS

Contributions to IRAs must be made by April 15th of the following calendar year, regardless of whether or not an extension has been filed by the taxpayer. Contributions may be made between January 1 and April 15 for the previous year, the current year, or both. All IRA contributions must be made in cash.

IRA ACCOUNTS

All IRA accounts are held in the name of the custodian for the benefit of the account holder. Traditional custodians include banks, broker dealers, and mutual fund companies.

IRA INVESTMENTS

Individuals who establish IRAs have a wide variety of investments to choose from when deciding how to invest the funds. Investors should always choose investments that fit their investment objectives. The following is a comparison of allowable and non-allowable investments:

Allowable

Non-Allowable

Stocks

Margin accounts

Bonds

Short sales

Mutual funds/ETFs/ETNs

Tangibles/collectibles/art

Annuities

Speculative option trading

UlTs

Term life insurance

Limited partnerships

Rare coins

U.S. minted coins

Real estate

IT IS UNWISE TO PUT A MUNICIPAL BOND IN AN IRA

Municipal bonds or municipal bond funds should never be placed in an IRA because the advantage of those investments is that the interest income is free from federal taxes. Because their interest is free from federal taxes, the interest rate that is offered will be less than the rates offered by other alternatives. The advantage of an IRA is that money is allowed to grow tax-deferred; therefore an individual would be better off with a higher yielding taxable bond of the same quality.

ROLLOVER VS. TRANSFER

An individual may want or need to move their IRA from one custodian to another. There are two ways this can be accomplished. An individual may rollover their IRA or they may transfer their IRA.

 
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