An individual retirement account (IRA) is a long-term saving account that allows you to contribute earned income to your retirement.
If you have a 401(k) or other employer-sponsored retirement account, then an IRA can help you save more money for your future. These accounts also provide the opportunity for you to contribute to retirement savings if you don’t have access to an employer-sponsored plan.
When an IRA may make sense for you
An IRA may be a fit if you:
Are ready to start saving for retirement
Have one or more 401(k) accounts from previous employers and would like to consolidate your retirement savings
Want to save more for retirement, in addition to your employer-sponsored 401(k)
Don’t have access to a retirement plan through an employer
How to open a Guideline IRA
Current participants
If you already have an active 401(k) account with Guideline, you can open an IRA directly from your account dashboard. To do so, navigate to your name in the top, right corner and select Open an IRA from the dropdown menu.
Note that your IRA investment allocation will automatically default to match your 401(k) options. If you would like to update your Guideline IRA portfolio, you can do so during the IRA account creation process and after the account is activated. Feel free to view our fund menu here.
New participants
If you are new to Guideline, you can learn more about our IRAs by visiting our website. Once you’re ready to get started, select the “Set up your IRA” button.
You can then follow the step-by-step process where you’ll enter the following:
Personal information
Portfolio selections
Beneficiaries
How to contribute to your IRA
Once you have verified your account details, you’ll connect your bank account and set up your recurring contributions.
If you would like to make contributions for the current year, you will select this tax year, your elected contribution amount, and the frequency (one-time or monthly). You can choose to apply your contributions to the previous tax year (carryback contributions) if you are making those contributions by the tax filing deadline, generally April 15 of the current year.
IRA contribution limits
With an IRA, you can contribute up to the annual IRS limits. This limit can change each year, depending on cost-of-living adjustments.
You can keep track of how much you contribute throughout the year and how far away you are from reaching the limit by reviewing the “projected year contributions” timeline in your dashboard.
Once you reach the annual limit for a given tax year, contributions for that tax year will be suspended.
Please note, contribution limits apply across all IRAs in your name to which you may be contributing. If you have other IRA accounts, we cannot monitor external contributions. Therefore, it’s important to monitor your overall contribution limits. However, 401(k) contribution limits are independent from IRA limits.
IRA tax implications to consider
The IRS requires you to have eligible taxable compensation to be eligible to contribute to an IRA. Eligible compensation includes taxable wages, tips and other compensation reported in Box 1 of Form W-2, commissions and self-employment income.
Your IRA contribution for the year cannot exceed the eligible compensation amount you receive for the year. For example, if your eligible compensation is only $4,000, your contribution is limited to $4,000, regardless of the IRS limit.
Note that your traditional IRA contributions may not be fully deductible if you or your spouse participate in another retirement plan at work.
Roth IRA contributions might be limited if your income exceeds a certain level.
Visit the IRS site to learn more about IRAs.
The information provided herein is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. You are advised to consult a qualified financial adviser or tax professional before relying on the information provided herein.