A Vanguard individual retirement arrangement is a specialized retirement account offered by the investment management company Vanguard. All IRAs, including those offered by Vanguard, carry various tax benefits. Traditional IRAs allow you to defer income taxes on investment gains and may allow you to take tax deductions on your contributions. Roth IRAs don't provide tax deductions on contributions but allow the tax-free withdrawal of qualified distributions. Once you have an IRA open with Vanguard, you can make deposits to add to the account. However, the size of your contributions may be limited by the Internal Revenue Service.
Access your account. One of the easiest ways to make deposits to your Vanguard account is to set up an online account. To set up an online username and password, you'll need to enter personal information, such as your name, address and date of birth. You'll also need to verify your identity, using your Social Security number.
Verify IRS limits on contributions. For tax year 2012 your contributions to all of your IRAs may not exceed $5,000. For tax year 2013, the maximum is $5,500.
Check IRS rules on the deductibility of your contributions. Many investors won't make a contribution to a traditional IRA if they can't take a tax deduction for it. If either you or your spouse is covered by a retirement plan at work, you may not be able to take a tax deduction if your income exceeds certain limits. However, if neither you nor your spouse is covered by a plan, you can deduct the full amount of your IRA contributions, regardless of income. For a Roth IRA, you won't get any tax deduction at all. IRS Publication 590 lists the rules on tax deductions for IRA contributions.
Choose your funding method. Vanguard allows deposits via electronic bank transfer, check, or bank wire.
Locate your bank information to make an electronic or wire transfer. Every bank has a unique routing number that is used to identify the institution for electronic transfers. You'll need your bank's routing number and your personal account number to make an electronic transfer to your Vanguard IRA.
Print out a purchase form to make a check deposit. If you're opening a new Vanguard IRA, you'll have to chance to indicate that you want to make a check deposit during the account-opening procedure. The purchase form must accompany your personal check to make your IRA deposit. As of the date of publication, the initial deposit must be at least $3,000. If you already have a Vanguard IRA, you can request the purchase form from the customer service area of the website. You may also call Vanguard directly to have the form sent to you.
Report your contributions to the IRS. Whether or not you're taking a tax deduction, you should report your contributions to a traditional Vanguard IRA to the IRS. If you're taking a tax deduction, you must report the contribution, but even if you aren't, you'll want a record of your non-deductible contribution. Vanguard will send you Form 5498 at the end of the year showing the total amount of your annual IRA contributions. If you're contributing to a Roth IRA, you don't have to report your contributions.
- Jupiterimages/liquidlibrary/Getty Images
- How to Open a SEP IRA Account
- Can I Find Out How Much I Will Get Back on My Taxes Without My W-2s?
- 501(c)(3) Nonprofit Retirement Plan Contribution Limits
- How to Calculate Excess IRA Contributions
- How do I Invest In Stocks or Mutual Funds?
- How to Determine if a Tax Return Has Been Cashed
- How to Convert a Self-Directed IRA to a Self-Directed Roth
- How to Cash in a SEP IRA