Customer Service

IRA CD Accounts FAQ

How can I decide which type of IRA is the best choice for me?

Discover Bank offers both Roth and Traditional IRAs. When choosing which type of IRA to open, you should consider factors such as your taxable income, age and family status. Your financial advisor or tax professional can help you determine which type of IRA is best suited to your needs.

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Can I have more than one IRA?

Yes, you can have multiple IRAs; however, your total contribution can't be more than the maximum contribution allowed for that year. Multiple IRAs can be opened with the same or different financial institutions. At Discover, you can have only one of each plan type (one Roth IRA and one Traditional IRA), but you can have multiple CDs within each plan type.

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

Yes, your annual contribution can be divided between both types of IRAs as long as you meet the eligibility requirements for each type of IRA. You should consult a financial advisor or tax professional for specific advice.

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Can I designate a beneficiary for my IRA?

Yes, in fact, all Discover Bank IRA accountholders are urged to designate at least one beneficiary (e.g. spouse, child, charity, etc.) by completing a beneficiary form.

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What information do I need to provide about my beneficiary?

You will need to provide the name, address, date of birth and Social Security number for your beneficiary and describe their relationship to you (i.e., parent/child, spouse). If you are married, by default your spouse will be designated as your primary beneficiary unless you and your spouse indicate otherwise on the beneficiary portion of the online application.

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What is the difference between a transfer and a rollover?

Both transfers and rollovers are ways to move funds from one retirement account to another.

  • With a transfer, funds are moved directly from one IRA (or other type of retirement plan) into another by the financial institution(s) where the accounts are held. Because you, the customer, never handle the funds, the transaction is not considered a distribution. There are no limits to the number of transfers you can make.
  • With a rollover, funds from one IRA (or other type of retirement plan) are distributed to you. It is then up to you to deposit the funds into another IRA or other retirement plan within 60 days in order to avoid tax consequences. Assets in the Rollover IRA are not counted toward your annual IRA contribution limits. Only one rollover for a single account is permitted per 12 month period.

To roll over or transfer IRA funds, please initiate your request online. For further information, please call Customer Service at 1-800-347-7000 (TDD 1-800-347-7454), 24 hours a day, 7 days a week.

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

You are permitted to make one rollover for a single account in a 365-day period.

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Is there a limit on the amount of money I can roll over?

No, you can roll over as much money as you'd like.

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When will I receive my Discover Bank IRA CD statements?

Discover Bank IRA CD statements are sent annually, just like our CD statements. You can expect to receive your IRA CD statement in early January.

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Can I borrow funds or withdraw from my IRA CD?

Loans may not be taken from IRA CDs. There are limited circumstances when you may withdraw before age 59½ from either a Roth or Traditional IRA without penalty. You should consult a tax professional or financial advisor for specific advice related to this transaction.

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Can I transfer funds from my employer's retirement plan into an IRA CD?

Yes, funds can be transferred into an IRA CD from any qualified retirement account. You should consult your financial advisor or tax professional for specific advice related to this transaction.

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Can a Traditional IRA be converted to a Roth IRA?

Yes, a Traditional IRA can be converted to a Roth IRA as a rollover contribution. You should contact your financial advisor or tax professional for specific advice related to this transaction.

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What are the benefits of making a conversion from a Traditional IRA to a Roth IRA?

A Roth IRA provides the following potential benefits not offered by a Traditional IRA:

  • Contributions can be made at any age, even after age 70 ½ provided you still have earned income.
  • There is no minimum distribution requirement.
  • Once the plan has been open for at least five years, distributions are not subject to tax or government penalties.

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Are there any disadvantages to converting from a Traditional IRA to a Roth IRA?

Converting from a Traditional IRA to a Roth IRA may have some tax implications. You should discuss this with your financial advisor or tax professional prior to conversion.

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How much of my IRA contribution is tax deductible?

Your financial advisor or tax professional can help you determine exactly how much of your IRA contribution is tax deductible.

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

For a Roth IRA, no restrictions apply. However, for a Traditional IRA, there are rules concerning age at death and calculating required minimum distributions to the beneficiaries. Your financial advisor or tax professional can help you determine the rules around distributions to beneficiaries.

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How are my IRA transactions reported to the IRS?

Form 5498 will be mailed to you and the IRS by May 31st. The form reports the contributions made during the previous tax year.

Form 1099-R will be mailed to you and the IRS by January 31st. The form is used to report IRA distributions for the previous calendar year.

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If I need more tax help, where should I go?

The Internal Revenue Service Web site, www.irs.gov, is a good starting point. You can also contact the IRS by phone at 1-800-829-1040.

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What fees are associated with my Discover Bank IRA CD?

Fees are assessed for special services and for early withdrawal, as outlined below.

Fee1 Schedule for CD Accounts
Incoming Domestic Wire Free
Incoming International Wire Free
Foreign Check Conversion At cost
Outgoing Domestic Wire $20
Outgoing International Wire $40
Copy of Statement or Deposit Item $5
Priority Mail $20
Returned Deposit Item $15
Withdrawal by Official Bank Check $5

1. If interest in account does not cover fee, your principal will be affected.
Early Withdrawal Fees for CD Accounts
Term of CD ProductFee for Early Withdrawal
CD term of less than one year 3 Months simple interest on the amount withdrawn
CD term of one year up to and including 5 years 6 months simple interest on the amount withdrawn
CD term greater than 5 years 9 months simple interest on the amount withdrawn
 

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2011 IRA Required Minimum Distribution FAQs

What is the deadline for submitting a distribution form to Discover Bank to fulfill my Required Minimum Distribution (RMD) by December 31st?
The deadline to submit a distribution form for RMD is December 15, 2011. Discover Bank cannot guarantee forms received after December 15th will be processed by the December 31st deadline.

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How can I get a distribution form to submit to Discover Bank for my RMD?
Click here or log in to the Account Center at DiscoverBank.com. Click on the Customer Service tab and select the form under the "Forms and Documents" section.

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Can I take 100% of my RMD from my Discover Bank IRA CD account?
Yes, assuming the balance is large enough.

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Do I have to take my RMD from my Discover Bank IRA account or can I take it from an IRA that I have at another financial institution?
You can fulfill your RMD requirements from an IRA account at any financial institution.

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I don't know how much I'm required to take from my IRA account. How can I find out?
Financial institutions typically send notices early in the year to advise IRA account holders of their RMD requirements, including the amount required to be withdrawn.  If you did not receive your notice from Discover Bank, or have misplaced it, just call us at 1-888-204-8966 and we will be happy to assist you.

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Is there an early withdrawal penalty for removing funds from my Discover Bank IRA CD account?
Early withdrawal penalties may apply for early distribution of funds from an IRA CD account.  However, if the funds distributed are a result of a Required Minimum Distribution, those funds are not subject to an early withdrawal penalty.

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Do I have to submit a form to request my RMD?
Yes.  Discover Bank requires that all distributions be requested using the distribution form.  Your distribution form must be received by Discover Bank no later than December 15, 2011.

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Will Federal and/or State withholding be applied to my RMD?
Federal and State withholdings will be applied where required by federal and/or state regulation unless you indicate otherwise on your distribution form.

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Are there tax consequences if I fail to take an RMD by the December 31st deadline?
Yes.  Failing to take your Required Minimum Distribution may result in tax consequences from the Internal Revenue Service.  Discover Bank encourages you to seek the advice of your tax professional or financial planner for specific tax consequences.

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How do I submit my RMD distribution form to Discover Bank?

Forms can be mailed or faxed to Discover Bank.  [Reminder, all forms must be received by Discover Bank no later than December 15th to guarantee processing by the December 31st deadline.]

Fax to:
1-801-996-2683

Mail to:
Discover Bank
PO Box 30418
Salt Lake City, UT  84130

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When should I expect to receive my RMD distribution?
Discover Bank will process your RMD distribution upon receipt and you should expect to receive your distribution within 10 days of processing.

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