Self-Directed Traditional IRA - Hilliard Lyons

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Self-Directed Traditional IRA. This document answers some of the most frequently asked Traditional IRA questions and will give you insight into a Hilliard Lyons ...
Self-Directed Traditional IRA This document answers some of the most frequently asked Traditional IRA questions and will give you insight into a Hilliard Lyons Self-Directed Traditional IRA. Your Hilliard Lyons Financial Consultant will provide you with ideas for your Traditional IRA and details on establishing an account. Establishing a Traditional IRA

Contact your Financial Consultant for more details.

Q :  Who is eligible for a Traditional IRA? A:  Everyone who is under the age of 70½ and receives earned income in the form of salary, fees, bonuses, commissions or alimony. Q :  I participate in a retirement plan through my employer. Do I still qualify to make a Traditional IRA contribution? A:  Yes. You can still contribute annually to a Traditional IRA. However, a full tax deduction may not be available, depending on your: • Active participation in an employer-sponsored retirement plan • Modified adjusted gross income • Tax filing status  In prior years, you may have had some or all of your deductible Traditional IRA contributions phased out if you (or your spouse) participated in an employer-sponsored retirement plan, and you had adjusted gross income above a certain amount. Today, if you are actively participating in an employer-sponsored plan and your spouse is not, your spouse may make a fully deductible Traditional IRA contribution as long as your joint MAGI does not exceed $186,000 for 2016. The deduction is completely phased out with MAGI of $196,000. This is known as the “spousal de-link.”

J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA, & SIPC

Self-Directed Traditional IRA IRA Deductibility Thresholds Expanded*




>$62k - <$72k

>$99k - <$119k

*For individuals and married couples filing jointly who are active participants in an employer sponsored retirement plan.

Q :  What are my potential tax advantages with a Traditional IRA? A: Contributions are tax deductible from your gross income, if you qualify. Regardless of the tax deductibility of your contribution, all taxes are deferred on all investment gains, dividends and interest until withdrawn. Contributing to Your Traditional IRA Q :  How much can I contribute each year?

Q :  Must I contribute to my Traditional IRA each year?

A: For 2016, you can contribute and deduct, if you qualify, $5,500** or 100 percent of compensation, whichever is less. Married couples can contribute a total of $11,000 ($5,500 to each in separate accounts).

A:   No. Annual contributions are voluntary. If you skip a year or do not wish to make the maximum contribution in any year, you cannot contribute more than the annual maximum to catch up.

Q :  What if I work only part time? A: You can contribute up to 100 percent of your earned income up to $5,500.**

**Contribution limit is increased to $6,500 for individuals 50 or older.

Q :  Must I contribute only cash? A:  Yes, unless you are establishing a rollover Traditional IRA with investments from a former employer’s retirement program, or consolidating the assets of other IRAs.

Q :  Can I have a Traditional IRA if my only source of income is from investments?

Q :  Can I include alimony payments when determining allowable contributions?

A:  No. You are eligible to make contributions only if you have earned income from salary, fees, bonuses, commissions or alimony.

A:  Yes. Alimony will qualify as compensation for calculating contributions.

Q :  When are my contributions due?

Q :  My spouse is not employed. Can she/he participate?

A:  Contributions may be made at the start of the tax year, Jan. 1, if you wish. An early contribution allows you to take full advantage of tax deferral and compounding of tax-deferred earnings. You must make your contribution no later than April 15 of the following year.

A: Y  es. You may open a Traditional IRA for your unemployed spouse who is under age 70½. The maximum contribution to the account is the lesser of $5,500 or 100 percent of the working spouse’s compensation. The maximum allowable annual contribution for a married couple is $11,000 ($5,500 each in separate accounts).

J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA, & SIPC

Self-Directed Traditional IRA Q :  My spouse has limited income of less than $250 per year. Can he/she still qualify for a spousal Traditional IRA? A:  Yes. However, your spouse must choose to be treated as having no income during the tax year. Hilliard Lyons Self-Directed Traditional IRA Q :  What investments can I make in Hilliard Lyons’ SelfDirected Traditional IRA? A:   A significant advantage of a Hilliard Lyons SelfDirected Traditional IRA is flexibility. Depending on your investment objectives, you may choose to invest in stocks, bonds, U.S. Government securities and mutual funds. In addition, you may write covered call options and buy put options to protect existing stock positions. Your Hilliard Lyons Financial Consultant offers up-to-date research information. You may trade in the Hilliard Lyons Self-Directed Traditional IRA account, as you would in a regular account, with no limit on the number of buys or sells made in any time period.

Q :  Does Hilliard Lyons manage my Self-Directed Traditional IRA? A:   No. As owner of the account, you manage it. Hilliard Lyons helps by providing research information and keeping custody of the securities. Annual reports will be provided showing contributions and withdrawals. However, you make any decisions to buy or sell securities. For Additional Help This piece is a general discussion of the Traditional Individual Retirement Account. For more information, please consult your tax adviser. Your Hilliard Lyons Financial Consultant will be pleased to make an appointment to discuss any questions you may have regarding specific investments.

Securities and advisory services offered through J.J.B. Hilliard, W.L. Lyons, LLC, a registered investment advisor and broker dealer. Member NYSE, FINRA & SIPC. Investing in securities involves risk, including possible loss of principal. ©2017. All rights reserved.

J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA, & SIPC