This information is not intended to provide specific recommendations to you, nor is it to be used as the primary basis for any investment decisions you might make. These are general tax considerations and do not take into account individual investor circumstances.

Some investment types (e.g., mutual funds) may be treated differently for tax purposes depending on the type of account (e.g., Traditional IRA) they are held in. You should obtain your own independent tax advice based on your particular circumstances.

The amounts you provided are a snapshot of your current financial position and can help you to focus on your financial resources and goals, and to create a plan of action. Neither Ameriprise Financial nor your financial advisor has undertaken to review or verify the accuracy of the information.

This is not a comprehensive assessment of the tax treatment for investments and accounts mentioned. The tax rules governing investments are complex, change frequently and depend on the individual taxpayer’s situation.

A Roth IRA is tax free as long as investors leave the money in the account for at least 5 years and are 59½ or older when they take distributions or meet another qualifying event, such as death, disability or purchase of a first home.

• Roth IRA/Roth 401(k) – Necessary requirements must be met, withdrawal before age 59½ may result in tax and a 10% penalty on earnings. 
• Cash Value Life Insurance – Death proceeds generally are not subject to income tax. Partial or full surrenders from a life insurance contract (and in some cases loans) may be subject to income tax to the extent of earnings. 
• Municipal Bonds and Tax-exempt Mutual Funds – Certain income may be subject to the alternative minimum tax and/or state or local taxes. Taxable income, including capital gains or losses, may be incurred.
• 529 and Coverdell Education Savings Accounts – If not used for education, may have to pay tax and a 10% penalty on earnings.
• Health Savings Account (HSA) - Distributions for qualified medical expenses are available tax free. Distributions for ineligible expenses will be taxed as ordinary income and subject to an additional 20% tax penalty, unless an individual is age 65 or older, becomes disabled, or dies.

• 401(k)/403(b), Small Business Plans (SEP and SIMPLE IRAs), Pension Plans or Traditional IRA - Withdrawals before age 59½ may result in tax and a 10% IRS penalty on the taxable portion of the distributions.
  • For traditional IRAs – Assumes contributions are deductible.
  • For 401(k) – Special rules apply to employer securities in qualified retirement plans. In IRAs, some investments may generate unrelated business taxable income which may incur the need for the IRA, not the taxpayer, to pay tax to the IRS.

• 457(b) Plans – Unlike other tax-deferred retirement plans such as IRAs or 401(k)s, you won't face a 10% early distribution penalty, even if you are underage 59½.

• Non-qualified Annuity or Traditional IRA with after-tax contributions – Withdrawals before age 59½ may result in tax and a 10% penalty on the taxable portion of the distributions. Special rules determine the allocation of earnings to withdrawals.

• Stocks, Mutual Funds, ETFs, BDCs – Qualified dividends and long-term capital gains may be taxed at a lower rate.
• Master Limited Partnerships – Partners are taxed on their allocable share of the partnership’s net income.
• Collectables – Long-term capital gain taxed at max rate of 28%.
• Unit Investment Trust – Taxed as either mutual funds or grantor trusts
• Checking/savings – Not investments; demand deposit accounts offered by banks and credit unions. Interest is taxed as ordinary income.