Harbor Funds | Frequently Asked Questions - Traditional IRA

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Traditional IRA
Do shareholders have to pay Harbor Funds an annual custodial fee for their IRA accounts? Show
No. As a Harbor Funds shareholder you pay no annual custodial fees for your IRA investment with Harbor. This means that the full amount of your IRA contribution is credited to your account. This distinguishes Harbor from those mutual fund families that charge annual custodial fees on IRA accounts. However, other fees and expenses do apply to a continued investment in a fund and are described in the current prospectus.
Can anyone contribute to a Traditional IRA? Show
IRA contribution eligibility and limitations are based on earned income or compensation of the individual for the year of the contribution.
What is earned income? Show
Earned income is income received for personal services rendered. Passive income, such as income from an investment, is not considered earned income for purposes of making an IRA contribution.
How much may I contribute to a Traditional IRA? Show
Individual annual contributions are limited to 100% of earned income, up to $5,000 ($6,000 if age 50 or older) for tax year 2012.
What is a spousal IRA contribution? Show

Unlike the regular IRA contribution rules, in which contributions are based on the individual's own compensation, the spousal IRA contribution rules allow lower compensated or non-compensated spouses to use their spouse's compensation when determining the IRA contribution limit. You can make a spousal contribution to your IRA if you are legally married, you file a joint federal income tax return, and the receiving spouse meets certain compensation requirements.

Spousal contributions are generally limited to 100% of earned income, up to $5,000 ($6,000 if age 50 or older) for tax year 2012.

Please consult with a tax adviser for more details.
Are there any tax deductibility limitations for the contributions you make to a Traditional IRA? Show
Although there is no limitation on maximum earned income to contribute to a Traditional IRA, there may be restrictions on the tax deductibility of what you contribute. Deductibility depends upon you or your spouse's status as an active participant in an employer-sponsored retirement plan, your Modified Adjusted Gross Income (MAGI) and your tax filing status.
Can I contribute to both a Traditional and Roth IRA? Show
Yes, as long as the aggregate contributions do not exceed your annual IRA contribution limits for the applicable tax year of the contribution.
Are there age restrictions on making Traditional IRA contributions? Show
After age 70½, contributions can no longer be made to a Traditional IRA.
When must Traditional IRA contributions be made? Show
Contributions must be made before the filing date for an individual's income tax return in the following year, not including extensions (generally, April 15th).
Do I have to wait until the day I reach the age of 50 to make a catch up contribution? Show
No, you may make the catch up contribution at any time during the calendar year in which you reach age 50.
What should I expect to receive from my IRA custodian if I made a contribution to my IRA? Show
Contributions are reported on Form 5498. However, the 5498's are not sent out until May 31st because shareholders have until the tax-filing deadline to make a contribution to their IRA's. You are not required to attach Form 5498 to your Form 1040.
Can I leave proceeds in a Traditional IRA for an indefinite time? Show
Once a shareholder reaches age 70½ required minimum distributions (RMD) must be taken every year. If a distribution is not taken, the shareholder may face up to a 50% penalty on the RMD that should have been taken.
When can I redeem shares from my Traditional IRA? Show
Money can be withdrawn at anytime. However, you may face IRS imposed penalties. To avoid the penalty, IRA proceeds must remain in the IRA until you reach age 59½. There are several exceptions that apply to the penalty for a withdrawal before age 59½ (see Pub. 590 for exceptions).
When must I take my first Required Minimum Distribution (RMD)? Show
The first distribution is required to be taken no later than April 1st of the tax year after you attain age 70½.  Subsequent distributions must be taken be December 31st of each succeeding tax year.
If I take my first Required Minimum Distribution after Dec 31st of the year I turn 70½ but before April 1st of the following year; am I required to take another distribution in the same year? Show
Yes, if the first distribution is delayed until the year following the year you reach age 70½ (but taken before April 1st), the second distribution must still be taken by December 31st of that year, which will result in two distributions in that calendar year.
If I made a charitable contribution, does that dollar amount count towards my RMD? Show
Qualified charitable distributions (QCDs) that are reported on your federal tax return may be used to satisfy RMDs. The requested distribution check must be made payable to the receiving charity and not you, the IRA holder.
What balance and/or life expectancy table does Harbor use to calculate the dollar amount on my RMD letter? Show
Harbor Funds uses the Uniform Lifetime Table when calculating RMD amounts. Such amounts are included in the notice letters mailed.
Can I take my RMD from only one custodian, or must I take an amount from each one (assuming you have IRA's at different companies)? Show
You may elect to receive an aggregate distribution from one IRA or a combination of IRAs held at different companies; however, it is your responsibility to ensure that the required amount has been taken for the year.
I have several IRA's, can I contribute the allowable contribution limit to each one? Show
No. You may split your contribution among multiple IRA's, but the aggregate annual contribution to all IRA's cannot exceed the annual IRA contribution limits for the applicable tax year of the contribution.
What should I expect to receive from my IRA custodian if I redeemed from my Traditional IRA within a given year? Show
If you redeemed shares from your IRA account, you will receive a 1099-R generally, by January 31st of the following year.
Are there any income limitations for making contributions to a Traditional IRA? Show
Minimum earned income must be equal to or greater than your annual contributions. There is no limitation on maximum earned income to contribute to a Traditional IRA, however, there may be restrictions on tax deductibility of what you contribute. Deductibility depends upon your or your spouse's status as an active participant in an employer-sponsored retirement plan, your Modified Adjusted Gross Income (MAGI) and your tax filing status.