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Understanding Roth & Traditional IRAs
Roth IRA
  • Any qualified distributions of earnings are federally tax-free and may be state tax-free if withdrawn at or after age 59½ and the individual retirement account has been open five years or more1 
  • Contributions (not earnings) can be withdrawn free of tax and the 10% additional tax at any time
  • Contributions are not tax-deductible
Traditional IRA
  • Any earnings are tax-deferred until withdrawn at or after age 59½ at which time they are taxed at your current rate2
  • Contributions and earnings can be withdrawn free of the 10% additional federal income tax at or after age 59½
  • Contributions may be tax-deductible
IRA Rollovers, Transfers & Conversions
If you'd like to move or convert an existing retirement account, Merrill Edge can help.
A Rollover IRA allows you to consolidate old retirement savings from previous employer-sponsored plans, such as a 401(k) or 403(b), while maintaining the tax-deferred status of your retirement savings.
Transferring an IRA to Merrill Edge is quick and easy. If you’re a Bank of America customer, you'll have the added benefit of viewing your bank accounts and Merrill Edge retirement accounts from the same page.
A Roth IRA Conversion  could create opportunities to generate tax-free retirement income for yourself and your beneficiaries.3 
Small Business IRAs
A small business IRA, such as a simplified employee pension (SEP) or a savings incentive match plan for employees (SIMPLE), can help you and your employees prepare for retirement. A SEP or a SIMPLE plan can also provide the opportunity for valuable tax advantages and serve as an effective tool for attracting and retaining employees.
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Questions & Answers
$600 Streamline Investing for Retirement with Merrill Edge

1 Any earnings are tax-free if you are at least 59½ or unless you qualify for an exception and the Roth IRA has been funded for at least five years from the year of conversion. There is a 10% additional tax for withdrawals of earnings taken before age 59 ½.



2 For Traditional IRAs — If you withdraw before age 59 ½ you may be subject to a 10% early withdrawal additional tax unless one of the following exceptions apply: qualified higher education expenses; qualified first home purchase (lifetime limit of $10,000); certain major medical expenses; certain long-term unemployment expenses; disability; or substantially equal periodic payments.

3 For a withdrawal from a Roth IRA to be federal (and, in most cases, state) income tax free, it must be considered qualified. There is a five-year holding period when determining whether earnings can be withdrawn tax-free as part of a qualified distribution from a Roth IRA. This period begins January 1 of the tax year of the first contribution or the year of conversion to any Roth IRA. The distribution must be made after the five-year holding period, and the individual must have reached age 59 ½, be deceased, disabled or use the funds for a first-time home purchase (lifetime limit of $10,000). There is a 10% additional federal income tax for non-qualified withdrawals of earnings taken before age 59 ½, unless one of the following exceptions apply: qualified higher education expenses; qualified first home purchase (lifetime limit of $10,000); certain major medical expenses; certain long-term unemployment expenses; disability; or substantially equal periodic payments. A special provision applies for converted assets. If a non-qualified withdrawal is made within five years of the conversion, the earnings withdrawn will be subject to income tax, and the entire withdrawal may be subject to an additional 10% federal income tax unless an exception applies.

Neither Merrill Lynch, Pierce, Fenner & Smith Incorporated nor any of its subsidiaries are tax or legal advisors. We suggest you consult your personal tax or legal advisor before making tax or legal-related investment decisions.