Registered Investment Advisor (RIA)
Offered by the Securities and Exchange Commission (SEC) or state securities
administrators 800-732-0330. The RIA designation indicates registration
with the SEC or with one or more of the states. No examination or continuing
education is required for a business to file for the RIA with the SEC,
but an individual broker-dealer must take the exam. States differ on requirements.
A Registered Investment Adviser is a person or firm that has filed with
the Securities and Exchange Commission and adheres to certain disclosure
requirements. This qualification is necessary for the rendering of investment advice.
Required Beginning Date (RBD)
For individual retirement accounts (IRAs), qualified plans, and Section 403(b) arrangements, the date by which distributions must begin. For IRAs and 5% or more owners who participate in a qualified plan sponsored by their business, required distributions must commence on or before April 1 of the calendar year following the calendar year in which the participant turns age 70 ½. For participants who are not 5% or more owners, distributions from qualified plans or Section 403(b) arrangements must begin by April 1 of the calendar year following the later of the year the participant attains age 70 ½, or the year in which the participant retires.
Required Minimum Distribution (RMD)
The minimum amount required to be distributed annually from a qualified plan account or IRA due to the attainment of age 70 ½. The required beginning date for these annual distributions is April 1 of the calendar year following the year in which the participant reaches age 70 ½. The minimum amount is calculated using the life expectancy of the participant or the participant and their beneficiary. A 50% excise tax is charged on any amount not distributed as required.
Rollover
A tax-free transfer of qualified plan assets to another qualified plan or IRA. A direct rollover is a rollover distribution that is paid directly from a qualified plan to an eligible retirement plan or IRA. This method avoids the mandatory 20% withholding. An indirect rollover is a distribution from a qualified plan payable directly to the participant. With this method the distribution incurs a mandatory 20% withholding which is applied toward taxes due in the year of the distribution.
Rollover IRA Account
An individual retirement account that is established for the sole purpose of receiving a distribution from a qualified plan so that the assets can subsequently be rolled over into another qualified plan. These qualified plan rollover assets cannot be co-mingled with contributory IRA funds; any co-mingling of these funds will disqualify it from being allowed to roll into another qualified plan in the future.
Roth IRA
A nondeductible IRA with several unique features. Withdrawals are not taxable if left in the account for 5 years, the owner may continue to make contributions to the account after he or she is age 70 ½, and there is no required beginning date for withdrawals.
