Mutual Fund Resource Center

Planning for Retirement


IRA Frequently Asked Questions


General Information on IRAs

What is the deadline for making Traditional IRA/Roth contributions for a given tax year?
Unless otherwise noted, IRA contributions must be postmarked by the tax filing deadline, not including extensions, for a given tax year (usually April 15th). When sending a contribution to your Guggenheim Investments IRA, be sure to write the contribution year on your check; otherwise, we will assume it is for the current tax year.     

What are the tax consequences if I take a distribution before age 59½ from my Traditional IRA?
In addition to regular income tax, you must pay a 10% federal penalty on all withdrawals before the age of 59½ if the distribution is not due to certain events. You may also be subject to penalties and/or tax at the state level. We recommend that you consult your tax advisor before taking any distributions.

What exceptions does the IRS allow to avoid the 10% early withdrawal penalty?
The IRS may allow taxpayers to remove funds from their IRAs prior to age 59½ without paying a 10% penalty in the following situations*:

  • You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income
  • The distributions are not more than the cost of your medical insurance
  • You are disabled
  • You are the beneficiary of a deceased IRA owner
  • You are receiving distributions in the form of an annuity
  • The distributions are not more than your qualified higher education expenses
  • You use the distributions to buy, build, or rebuild a first home
  • The distribution is due to an IRS levy of the qualified plan
  • The distribution is a qualified reservist distribution
  • Birth or adoption of a child (up to $5,000 if made within one year of birth/adoption date; applies to distributions made in 2020 or later)

When can I take a distribution from my Roth IRA?
Annual contributions may always be withdrawn tax-free and penalty-free. To take a qualified distribution*, exempt from taxes and penalties, the account must be established for 5 years AND your distribution must be for one of the following reasons:

  • 59½ or older
  • Death
  • Disability
  • First time home purchase (maximum of $10,000)

When do I have to start taking Required Minimum Distributions (RMDs)?
Starting in 2020, the age at which RMDs must begin increased from 70 ½ to 72. If you are the owner of a Traditional IRA, you must start receiving distributions from your IRA by April 1st of the year following the year in which you reach age 72. This is referred to as the required beginning date. If you elect to take your first RMD between January 1st and April 1st of the year following the year in which you reach age 72, you will be required to take a second distribution before December 31st that year in order to satisfy your second distribution.  RMDs must be distributed by December 31st every year thereafter.

I turned 70½ in 2019, do I have to take an RMD in 2020?
Yes. If you turned 70½ in 2019, you must take your first RMD by April 1, 2020. You are required to take your second RMD by December 31, 2020. All future RMDs must be taken by December 31st each year.

I am over 72 and am taking Required Minimum Distributions (RMDs). How can I find out my RMD amount for this year?
There are several ways for you to obtain this amount:

  • Contact us at 800.820.0888 and a Client Services representative will assist you 
  • Complete the Required Minimum Distribution Form and return it to us
  • Obtain IRS Publication 590-B and follow the instructions provided

What is a SEP IRA?
A SEP is a Simplified Employee Pension plan. A SEP plan provides employers with a simplified method to make contributions toward their employees’ retirement and, if self-employed, their own retirement. Contributions are made directly to an Individual Retirement Account (IRA) set up for each employee (a SEP IRA).  See IRS Publication 560 for more detailed SEP information.

What is the deadline for making SEP contributions for a given tax year?
The deadline for making SEP contributions is the same as the due date of the employer’s federal tax return (including extensions).

What is a transfer (aka direct transfer, trustee-to-trustee transfer)?
A transfer is a way of moving money directly from one IRA custodian to another. Typically, you initiate a transfer by completing an IRA Transfer form for the financial institution to which you wish to transfer your IRA. Your new IRA custodian will sign off on the form and forward it to your current IRA custodian for processing. Direct transfers are not considered distributions; they are not taxable and are not reported to the IRS. These types of transactions may take up to 3 weeks to complete. Individuals may make an unlimited number of transfers per year.

What is a rollover (aka 60-day Rollover)?
An individual who intends to roll over IRA funds is actually taking a distribution from his or her IRA. If the distributed funds are not deposited into an IRA within 60 days, the individual will be subject to taxation and/or penalties. A distribution, even if it is intended to be a rollover, is reported on IRS Form 1099-R. Upon completion of the rollover, the new IRA custodian reports the rollover deposit on IRS Form 5498. Successfully completed rollovers are generally tax-free but must be reported on the individual's tax return. Individuals are permitted to roll over only one distribution from an IRA (Traditional, Roth, or SIMPLE) in a 12-month period (NOT calendar year), regardless of the number of IRAs owned.

Can I rollover my Qualified Retirement Plan dollars (e,g. 401(k)) to an existing Traditional IRA?
Yes, the IRS allows a taxpayer to rollover after-tax contributions that were made to an employer-sponsored program through an eligible distribution. Please note however, that the IRA owner is responsible for keeping a record of the pre-tax and after-tax dollars in the IRA.

Can I rollover after-tax portions of my 401(k) into the same Rollover IRA as my pre-tax portions?
Yes, the IRS allows a taxpayer to rollover after-tax contributions that were made to an employer-sponsored program through an eligible distribution. Please note however, that the IRA owner is responsible for keeping a record of the pre-tax and after-tax dollars in the IRA.


Your IRA at Guggenheim Investments

What fees are associated with an IRA at Guggenheim Investments?
In addition to the expense ratios for each Fund (as disclosed in the prospectus), the following fees apply to IRAs at Guggenheim Investments:

  • $15 Annual Maintenance Fee
  • Other fees may apply for special services such as outgoing delivery or sending wires under $5,000

May I use the inverse funds in my IRA?
Yes, you may use any of the Guggenheim Investments mutual funds in your IRA.  When investing in an inverse fund, the Fund is doing the short selling, not the individual owner of the shares.

How do I request a distribution (withdrawal) from my IRA?
Distributions from an IRA must be requested in writing. Click here to download the IRA Distribution Form. This form may be faxed or mailed to us.

What happens if I don't indicate a withholding amount for my distribution?
If you do not indicate a withholding preference when you request your distribution, Guggenheim Investments must withhold 10% for federal tax. This 10% withholding should not be confused with the 10% penalty which applies to some early redemptions.

Can you withhold the 10% penalty for my non-qualified early distribution?
No, the penalty must be reported and paid separately. Please contact a tax professional for more information.

Where do I get IRA-related forms?
Click here to order IRA forms or to download forms online.

How do I change my IRA beneficiary designation?
Click here to download the Account Change form. This form may be faxed or mailed to us.

How do I set up an automatic deposit into my IRA?
All automatic deposits into an IRA will be designated as contributions for the year in which they are received. Click here to download the Automatic Investment Plan Request form. Be sure to attach a voided check and obtain a Medallion Signature Guarantee before mailing it to us.

Can I receive draft checks to make withdrawals from my IRA?
No. Due to tax requirements, draft checks are not available for any retirement account.

I just went through a major life change. What should I review about my IRA?
Major life changes such as getting married, having a child, etc. are good times to re-evaluate your finances. One of the most important things to do is to review your IRA beneficiaries. To update your beneficiary designations, click here to download the Account Change Form.

How long do IRA transfers take?
IRA transfers may take up to 3 weeks to complete after the transfer form is received by Guggenheim in good order.

What other methods can be used to have money sent to Guggenheim Investments from my current IRA?
Instead of processing a direct transfer, you may process a rollover. To do so you must request a distribution from your current IRA custodian and have the proceeds sent directly to you. Once received, you would then send this money to Guggenheim Investments along with an IRA Contribution Form. If you choose this option, there are several factors to keep in mind:

  • You must redeposit 100% of the funds you withdraw in an IRA within 60 days of receiving the money.
  • You are permitted to roll over only one distribution from an IRA (Traditional, Roth, or SIMPLE) in a 12-month period (NOT calendar year), regardless of the number of IRAs you own.
  • The institution from which you took the money will report the transaction to the IRS as a distribution on IRS Form 1099-R. The receiving institution will report the receipt of the funds to the IRS on IRS Form 5498.

Special Situations: 72(t), Conversions, Recharacterizations, Excess Contributions and Beneficiary Distributions

I am currently taking 72(t) distributions (aka substantially equal periodic payments) from my IRA.  Can I make contributions or take additional distributions?
No, once you begin receiving 72(t) distributions you may not make new contributions or take distributions in excess of your 72(t) plan.

Can I convert my Traditional IRA to a Roth IRA?
Yes, you may convert your Traditional IRA to a Roth IRA. In 2010, the federal income and filing status restrictions that previously prevented many investors from converting their Traditional IRA to a Roth IRA were eliminated (certain states have NOT adopted this waiver for state tax purposes so consult your tax professional for complete details). If you are currently taking required minimum distributions (RMD), you must withdraw your RMD for the year in which you convert before the Roth conversion takes place. When considering the conversion, be aware that you must pay tax on all untaxed dollars converted from a Traditional IRA to a Roth IRA. However, as long as the conversion is completed properly, the 10% early distribution penalty will not apply. The Roth conversion must be completed by December 31st of a given tax year in order to be applied to that year.

To convert a Traditional IRA to a new Roth IRA at Guggenheim Investments, click here to download an IRA Kit. Complete the “Roth IRA Conversion” option in Section 2 and the “Tax Withholding” of Section 11. Be sure to complete the IRA Transfer/Direct Rollover Request if required.

How can I recharacterize a Roth contribution to a Traditional IRA?
Send us a letter of instruction which includes the following information:

  • The account number and amount of the contribution to be recharacterized.
  • The date the contribution was made and the tax year for which it was designated.
  • The account number to which the contribution will be transferred.
  • Directions to directly transfer the contribution and earnings to the receiving account. If both accounts are not held at Guggenheim Investments, additional information may be required.

How can I correct an excess contributions?
If you determine that you made an excess contribution to an IRA at Guggenheim Investments, send us a letter of instruction which includes the following information:

  • The account number and amount of the excess contribution
  • The date the excess contribution was made and the tax year for which it was designated
  • Directions to calculate any gains or losses and how to return the funds

In some cases, you may also be able to redesignate a contribution for the next tax year. Certain restrictions and penalties may apply when removing an excess contribution (and earnings) after the taxpayer's filing deadline (including extensions).

I am the beneficiary of an IRA owned by someone who recently passed away. What do I need to do?

In order to receive the proceeds of an IRA which you have inherited, please call us at 800.820.0888 for account-specific requirements.


Tax Forms for IRAs

What is a 1099-R?
A 1099-R is an IRS form which reports distributions from an IRA. This form is mailed to all applicable shareholders by January 31st. Click here to access our Tax Guide including FAQs about IRS Form 1099-R.

What is a 5498?
A 5498 is an IRS form which reports any rollovers or contributions to an IRA. Since contributions for the previous tax year can be made until the tax filing deadline, this form is mailed by May 31st. Click here to access our Tax Guide, including FAQs about IRS Form 5498.

 

*SOURCE: Publication 590-B, Department of the Treasury, Internal Revenue Service, 2020

This information does not constitute tax advice. Please consult your tax advisor and/or state and local tax offices for more complete information.

 

 



Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objective, risks charges, expenses and the other information, which should be considered carefully before investing. To obtain a prospectus and summary prospectus (if available) click here or call 800.820.0888.

Investing involves risk, including the possible loss of principal.

Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Distributors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Corporate Funding, LLC, Guggenheim Partners Europe Limited, Guggenheim Partners Fund Management (Europe) Limited, Guggenheim Partners Japan Limited, GS GAMMA Advisors, LLC, and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC.

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This website is directed to and intended for use by citizens or residents of the United States of America only. The material provided on this website is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Investing involves risk, including the possible loss of principal.