What Account is Right for You?

Individual Account

A standard account with only one owner.  Upon the death of the owner, all property is passed to the account owner’s estate. 

Joint Accounts 

Joint Account with Rights of Survivorship (JTWROS)

Each account holder owns an undivided interest in the account. Upon the death of an account owner, the account is passed to the other owner or owners. 

Joint Account with Tenants in Common (JTIC)

Account owners can designate an undivided interest in the account.  Upon the death of an account owner, the deceased percentage interest in the account is passed to his or her estate.  

Custodial Account

Uniform Gift to Minors Act (UGMA)/Uniform to Transfer to Minors Act (UTMA). These custodial accounts allow a minor to own cash or securities that are controlled by a custodian until the minor meets the age of majority for the state in which the account was set up.  All deposits into these accounts are irrevocable gifts to the minor recipient.  UGMA accounts are offered in South Carolina and Vermont.  All other states and the District of Columbia offer UTMA accounts. 

Retirement Accounts 

Traditional IRA

A Traditional IRA (also called a Contributory IRA) can be established by an individual to save money for retirement. Up to $5,000 a year (for 2008) of tax-deferred earned income can be placed in an IRA until the account owner turns 70½ years old. An individual can also contribute an additional $5,000 a year of earned income to a separate IRA for a non-income-earning spouse. Account owners who are age 50 or over are allowed to contribute an additional $1000. Taxable distributions from an IRA can be taken without penalty starting at age 59½, and must be started by April 1 after the individual has reached 70½ years of age. 

Roth IRA

A Roth IRA is similar to a Traditional IRA. However, while contributions to a Traditional IRA may be tax-deductible and withdrawals are taxed, contributions to a Roth IRA are taxed, but qualified withdrawals are federal tax-free. After a Roth IRA has been in existence for five years, withdrawals are not taxable if, 1) the account owner turns 59½ years old, 2) the withdrawal (up to $10,000) is used for the first-time purchase of a home, 3) the account owner is disabled or 4) the account owner is deceased.  

Rollover IRA

A Rollover IRA is designed as a holding account for funds distributed from an employer's qualified retirement plan such as a 401(k) or 403(b). Moving funds into a Rollover IRA allows the account owner to return the funds to another qualified retirement plan in the future. 

Simplified Employee Pension (SEP) IRA

A SEP IRA is for self-employed individuals and for use by small companies for qualified employees. SEP IRA contributions are limited to up to 25% of the individual's compensation or $42,000, whichever is less. In 2008, SEP IRA contributions are limited to 25% of the individual's compensation (with compensation being capped at $230,000) or $46,000, whichever is less. 

Educational Savings Account (Coverdell)

The Coverdell ESA is a savings plan created for the purpose of paying a student's qualified educational expenses. Contributions to a Coverdell ESA are not tax-deductible. Distributions from a Coverdell ESA may be tax-free (must be used to pay for qualified educational expenses). The maximum contribution per year is $2,000. 

Corporation

Account opened in name of an incorporated business and managed by its officers or authorized traders. 

Limited Liability Company

Account opened in the name of a Limited Liability Company organized under its applicable state laws and managed by the LLC's officers or authorized traders. 

Partnership

Account registered in the name of a Partnership and managed by the general partners of the Partnership. A Tax Identification Number must be used, not an individual Social Security Number. 

Sole Proprietorship

A Sole Proprietorship account is for an unincorporated, single-owner business in which the owner and the owner's company are considered a single entity for tax and liability purposes. 

Trust

Account registered in the name of a trust managed by its named trustees for the benefit of the account owner or other named beneficiaries.