Question 1

What is the difference between a Roth IRA and a Traditional IRA?

Accepted Answer

A Roth IRA is a retirement plan for contributions made with after-tax dollars. Contributions are not tax-deductible and all qualified distributions are tax-free.

A Traditional IRA is a retirement plan for contributions made with pre-tax dollars. Some contributions are tax-deductible and most distributions are taxable.

Question 2

Can I open an inherited IRA with Discover?

Accepted Answer

We do not allow customers to move inherited IRA funds from an inherited IRA at another financial institution to an inherited IRA with Discover. We can open an inherited IRA if you are the beneficiary of an IRA that is already with Discover and will maintain that IRA here, or send funds to an inherited IRA externally.

Question 3

Can a Traditional IRA be converted into a Roth IRA?

Accepted Answer

Yes. A Traditional IRA may be converted to a Roth IRA. For guidance on potential tax implications, we encourage you to consult a tax professional at your expense. To request an IRA conversion, contact an IRA Specialist at 1-888-204-8966. We’re here to help.

Question 4

What is the difference between a rollover and a transfer when it comes to an IRA Account?

Accepted Answer

When you rollover an IRA, the funds are made payable and distributed directly to you. You then have 60 days to deposit the funds into another IRA or other retirement plan in order to avoid tax implications. IRA owners are limited to only one IRA-to-IRA rollover in any 12 month period.

When you transfer an IRA, the funds are moved directly from one financial institution to another. The transfer check is made payable to your financial institution for your benefit. Because you don't handle the funds directly, the transaction is not considered a distribution. There is also no limit to the number of transfers you can make.

For both rollovers and transfers, if you have a Traditional IRA, you can rollover or transfer funds from all types of IRA accounts other than Roth (i.e., Traditional, SEP, SIMPLE); if you have a Roth IRA, you can rollover or transfer funds from any type of IRA (i.e., Roth, SEP, SIMPLE) other than a Traditional IRA.

Rollovers and transfers, other than the new 529-to-Roth (529 aka College Student Savings), are not counted toward your annual IRA contribution limits.

Question 5

Is there a limit to how often I can rollover funds?

Accepted Answer

Yes. IRA account owners are limited to one rollover per year.

Question 6

Is there a limit on the amount of funds I can rollover in an IRA Account?

Accepted Answer

No. You can rollover as much money as you want, however, you cannot rollover IRA funds more than once every 365 days.

Question 7

Can I contribute to both a Roth IRA and a Traditional IRA?

Accepted Answer

Yes. Your annual contribution can be divided between both types as long as you meet the eligibility requirements for each IRA type. You may not contribute more than the annual allowable maximum across all of your Traditional and Roth IRA accounts at all of your financial institutions.

For guidance on the best way to contribute, we encourage you to consult a financial advisor or tax professional at your expense. For general questions and information regarding IRA accounts, contact an IRA Specialist at 1-888-204-8966. We’re here to help.

Question 8

Can I designate a beneficiary for my IRA?

Accepted Answer

Yes. We recommend that all of our IRA plan holders designate at least one beneficiary by completing the IRA Designation or Change of Beneficiary form. When completing the form make sure to:

Name your primary beneficiary in section 2
Complete section 3 for spousal consent if you are designating someone other than your spouse as 100% primary beneficiary
Name your contingent beneficiaries and their share in whole numbers totaling 100%
Sign and date it

We also recommend reviewing your beneficiary information after a major life event, such as marriage, divorce, birth or adoption of a child, or death. If a beneficiary is not designated, beneficiary payment will generally go to the IRA plan holder's estate, which is subject to any applicable community property state law requirements.

Please note: Beneficiaries are designated at the plan level. You may maintain different beneficiaries if you have Traditional IRA and Roth IRA plans.

Question 9

What fees are applicable to my IRA account?

Accepted Answer

There are no bank fees associated with either our IRA CD or Savings products.

Question 10

How do I add funds to my IRA account?

Accepted Answer

You can fund your IRA account in one of the following ways:

Transfer from an eligible Discover bank account you own (internal transfer)
Transfer from an external bank account you own (external transfer via ACH)
Regular Mail: Mail a check that includes your IRA account number, made payable to you, to:

Discover
P.O. Box 30418
Salt Lake City, UT 84130

Overnight Mail: Mail a check that includes your IRA account number, made payable to you, to:

Discover
5420 West 1730 South
Salt Lake City, UT 84104

*Please note that Travelers Checks will not be accepted for either mail option.

Send a wire transfer; for domestic wire transfers (from another bank in the U.S.), please wire funds to:

Beneficiary Bank: Discover, a division of Capital One, N.A.
ABA/Routing Number: 031100649
Beneficiary Bank Address (if required): 502 East Market Street, Greenwood DE 19950
Beneficiary Name: Your name (as it appears on your Discover IRA CD account)
Beneficiary Address: Your address (as it appears on your Discover IRA CD account)
Beneficiary Account Number: Your Discover IRA CD account number

For more information about wire transfers or instructions for sending an international wire transfer, please refer to our “Wire Transfer” FAQ.

If you are adding funds via a bank-to-bank transfer or direct rollover of an existing IRA, the current holder of the plan will be responsible for sending your funds to us.

Question 11

How do I withdraw funds from my IRA account?

Accepted Answer

Complete the IRA Distribution Form and return it to us in one of the following ways:

Upload	Secure Document Upload
Fax	1-224-813-5227
Regular mail	Discover, PO Box 30418, Salt Lake City, UT 84130
Overnight mail	Discover, 5420 West 1730 South, Salt Lake City, UT 84104

In some cases regarding IRA CDs, an Early Withdrawal Penalty may apply. The Early Withdrawal Penalty may reduce the principal in the IRA CD. Note: We do not assess Early Withdrawal Penalties for Required Minimum Distributions (RMDs).

For guidance on potential tax implications, we encourage you to consult a tax professional at your expense.

Question 12

What is the penalty for early withdrawal from an IRA CD?

Accepted Answer

See the latest Deposit Account Agreement for information regarding penalties applicable to your IRA CD. In some cases, the Early Withdrawal Penalty may reduce the principal. Note: We do not assess Early Withdrawal Penalties for Required Minimum Distributions (RMDs) nor for distributions from inherited IRAs. For guidance on potential tax implications of an early withdrawal, we encourage you to consult a tax professional at your expense.

Question 13

Are Discover IRAs FDIC-insured?

Accepted Answer

Funds in Discover deposit accounts are FDIC-insured up to the maximum amount allowed by law. For more information, visit our FDIC information page.

Question 14

How are my IRA transactions reported to the IRS?

Accepted Answer

Any contributions made during the tax year will be reported on Form 5498. Additionally, any rollovers, conversions, recharacterizations and the fair market value are reported on Form 5498. We will normally send Form 5498 to you and the IRS by May 31.

Any distributions made from your IRA plus any federal and/or state withholding during a tax year will be reported on Form 1099-R. We will send Form 1099-R to you by January 31.

Question 15

How do I take an early or normal distribution from my IRA account?

Accepted Answer

Please complete the IRA Request for Distribution Form, select the option that applies to you and submit it to us in one of the following ways:

Upload	Secure Document Upload
Fax	1-224-813-5227
Regular mail	Discover, PO Box 30418, Salt Lake City, UT 84130
Overnight mail	Discover, 5420 West 1730 South, Salt Lake City, UT 84104

An early or normal distribution from an IRA could have tax implications. For guidance on potential tax implications based on your tax filing status, we encourage you to consult a tax professional at your expense.

Question 16

Can I borrow or withdraw funds from my IRA account?

Accepted Answer

Loans may not be taken against IRAs and there are limited circumstances when you may withdraw from the account before age 59½ from either a Roth or Traditional IRA without tax penalty. For additional guidance regarding a potential IRA Early Distribution Penalty, we encourage you to consult a tax professional at your expense. Note: See the latest Deposit Account Agreement for information regarding penalties applicable to your IRA CD. In some cases, the Early Withdrawal Penalty may reduce the principal.

Question 17

What are the rules regarding distribution of funds to my beneficiaries after death?

Accepted Answer

Roth and Traditional IRA plans offer multiple options for beneficiary distribution. The options available to your beneficiaries depend on multiple factors, including whether they are a spouse, a designated beneficiary and the age of the IRA owner at the time of death.

There are several rules concerning Required Minimum Distributions (RMDs) to beneficiaries of Traditional IRAs. The rules apply considerations such as the age of the IRA owner at the time of death. Please note that RMD rules in the event of account owner death are different from the rules when an account owner is RMD age. For example, the beneficiary may be required to satisfy the IRA owner's RMD prior to making the RMD for the chosen beneficiary option. For additional information about distributions to beneficiaries, we encourage you to consult a tax professional at your expense.

For IRA Deceased Customer Account Handling steps, please click here.

Question 18

Do I have to take my RMD from my Discover IRA or can I take it from an IRA I have at another financial institution?

Accepted Answer

You can fulfill your RMD requirements from a Traditional IRA or combination of Traditional IRAs at any financial institution(s).

Question 19

How do I find out how much I'm required to take from my IRA for my RMD?

Accepted Answer

We notify IRA owners of RMD requirements on the annual IRA statement by January 31 and on Form 5498 by May 31. You can access and view your account statement as well as your Form 5498 in the Account Center.

Question 20

Will federal and/or state income tax withholding be applied to my RMD?

Accepted Answer

Federal and state income tax withholding will be applied where required by federal and/or state laws. In some cases, you will be able to indicate that you prefer no withholding or more withholding than is required. You will always be responsible for the income tax obligations of distributions from your IRA accounts. To make sure your withholding elections are right for you, we encourage you to consult a tax professional at your expense. If you fail to affirmatively opt out or clearly designate withholding elections on the RMD or IRA distribution form, we will process the minimum required for federal and state according to IRS guidelines.

Question 21

Are there tax implications if I fail to take an RMD by the December 31 deadline?

Accepted Answer

If you are required to take an RMD, failing to do so may result in tax implications from the Internal Revenue Service (IRS). For guidance on potential tax implications, we encourage you to consult a tax professional at your expense.

Question 22

Can I make additional deposits to my IRA account?

Accepted Answer

For an IRA Savings account, you can deposit additional funds at any time. Once registered for the Account Center, you can initiate contributions online to fund your account up to the applicable IRA contribution limits. You can also provide instructions online for transfers and rollovers.

For an IRA CD account, you can deposit additional funds at maturity or during your grace period. Please keep in mind that you will need to submit a correctly completed contribution, rollover or transfer form in a timely manner to ensure we receive your funds prior to the end of your grace period.

Question 23

What steps do I need to take to add funds to my IRA account?

Accepted Answer

For an IRA Savings account, log into your account and select “Add Funds to IRA” on the account details page. We’ll guide you through a few simple steps where you can let us know how you will be adding your funds – via a contribution, rollover or transfer - and provide your instructions. If applicable, we’ll provide you with the required form and additional details about how to submit your instructions and send us your funds.

For an IRA CD account, log into the Account Center and download the applicable
contribution, rollover or transfer form from “Forms and Documents” in the Help
Center. Return your correctly completed form to us in a timely manner to
ensure we receive your funds prior to the end of your grace period.

If you prefer, you can call us at 1-888-204-8966 to provide funding instructions.

Question 24

Can I rollover funds from my former employer's retirement plan into an IRA account?

Accepted Answer

Yes. Funds may be moved from a qualified retirement account into an IRA. This transaction is done via a Direct or Indirect Rollover. For additional guidance, we encourage you to consult a financial advisor or tax professional at your expense.

For more information, contact an IRA Specialist at 1-888-204-8966.

Question 25

How much of my IRA contribution is tax-deductible?

Accepted Answer

To determine how much of your IRA contribution is tax-deductible, we encourage you to consult a tax professional at your expense. The amount of your available deduction is influenced by several factors including your (and your spouse) participation in a retirement plan through an employer, age, tax filing status, and income.

If you reach the tax deduction limit for contributions to a Traditional IRA plan you may also be permitted to make non-deductible contributions to a Traditional IRA plan up to the contribution limit. For additional guidance, we encourage you to consult a financial advisor or tax professional at your expense.

Contributions of all types (deductible and non-deductible) and to all IRA plan types (Roth and Traditional) must not in aggregate exceed the annual contribution limit set by the IRS.

Question 26

When will I start earning interest on new deposits?

Accepted Answer

The interest begins to accrue on a deposit on the Business Day we receive it.

Question 27

How is interest on my IRA calculated?

Accepted Answer

Interest is compounded daily, credited to your account monthly, and calculated on a 365-day basis. For additional detail, see Section 5 of the Deposit Account Agreement.

Question 28

Can I transfer interest earned on my IRA CD to another account?

Accepted Answer

If you are 59 ½ or older, interest earned on and posted to your IRA CD may be transferred to an eligible Discover account. To set up an interest distribution from your IRA account(s), please complete the IRA Request for Distribution Form and submit it to us in one of the following ways:

Upload	Secure Document Upload
Fax	1-224-813-5227
Regular mail	Discover, PO Box 30418, Salt Lake City, UT 84130
Overnight mail	Discover, 5420 West 1730 South, Salt Lake City, UT 84104

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IRA Account FAQ

We’re here to help with your existing IRA account

Can’t find what you’re looking for in our Online Banking FAQ?

Friendly support from a real person who’s here to help

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