Bank of America Retirement Account Options and Rules

What Bank of America offers for retirement savings

Bank of America does not create its own retirement accounts. Instead, it acts as a custodian — the institution that holds the money and handles the paperwork — for accounts you set up through its brokerage division, Merrill Edge. You can open a traditional IRA, Roth IRA, SEP IRA, or straightforward IRA through Merrill Edge, and Bank of America will hold the funds while you choose what to invest in.

If you have a 401(k) through your employer, Bank of America does not administer those plans — your employer chooses the plan provider. However, if you leave a job and have an old 401(k) sitting with a former employer's plan, you can roll it into an IRA held at Bank of America.

Bank of America also offers a brokerage IRA — a regular investment account without retirement tax benefits — if you want to save beyond IRA limits or do not meet IRA rules. This account has no contribution limits and no age restrictions on withdrawals, but the money grows in a taxable account.

Key Takeaways

• Bank of America holds retirement accounts through Merrill Edge but does not create the account types themselves — you choose which IRA type fits your situation.
• Traditional and Roth IRAs have the same 2024 contribution limit of $7,000 per year (or $8,000 if you are 50 or older), regardless of which bank holds the account.
• A rollover from an old 401(k) into a Bank of America IRA moves the money without triggering taxes, but you must complete the rollover within 60 days or face penalties.
• Bank of America charges no annual IRA custodial fees, but you pay investment fees based on what you choose to buy inside the account.
• If you are self-employed or own a small business, a SEP IRA or straightforward IRA through Bank of America may let you save more than a regular IRA allows.

Contribution limits and who can open each account type

A traditional IRA through Bank of America accepts contributions up to $7,000 per year in 2024 (or $8,000 if you are 50 or older). You can open one if you have earned income — wages, self-employment income, or taxable alimony. There is no income limit to open a traditional IRA, but if you or your spouse have a workplace 401(k), your ability to deduct contributions on your tax return phases out at higher incomes. The IRS publishes the exact income ranges each year.

A Roth IRA through Bank of America has the same $7,000 annual limit (or $8,000 at 50+) but works differently: contributions are not tax-deductible, but withdrawals in retirement are tax-free. Roth IRAs have income limits — you cannot open one if your income exceeds a certain threshold, which the IRS adjusts yearly. For 2024, the limit phases out starting at $146,000 for single filers and $230,000 for married couples filing jointly.

A SEP IRA is for self-employed people and small business owners. You can contribute up to 25% of your net self-employment income, with a maximum of $69,000 in 2024. A straightforward IRA is for businesses with 100 or fewer employees. Employees can contribute up to $16,000 per year in 2024 (or $19,500 if 50 or older), and employers must make matching or non-elective contributions.

Tax treatment and deductions

Money you put into a traditional IRA may be tax-deductible in the year you contribute it, depending on your income and whether you have a workplace retirement plan. When you withdraw money in retirement, those withdrawals are taxed as ordinary income. You must begin taking required minimum distributions (RMDs) at age 73, starting in 2023 — the IRS sets the amount based on your age and account balance.

A Roth IRA offers no deduction when you contribute, but the account grows tax-free and withdrawals are tax-free in retirement, provided you have held the account for at least five years and are 59½ or older. Roth IRAs have no required minimum distributions during your lifetime, which makes them useful if you do not need the money when ready.

Both account types are subject to a 10% early withdrawal penalty if you take money out before age 59½, with limited exceptions (first-time home purchase, medical expenses, disability). The penalty applies to the earnings only in a Roth IRA; in a traditional IRA, it applies to the full amount withdrawn.

Rolling over a 401(k) from a previous employer

If you left a job and have a 401(k) with a former employer, you can move that money into an IRA at Bank of America without paying taxes on it. This is called a rollover. You have two ways to do it: a direct rollover (the old plan sends the money straight to Bank of America) or an indirect rollover (the plan sends you a check, and you deposit it into Bank of America within 60 days).

A direct rollover is simpler and safer — there is no 60-day important date and no withholding. With an indirect rollover, the old plan may withhold 20% of the balance for taxes, and you must deposit the full amount (including the withheld portion from your own pocket) within 60 days or the shortfall is treated as a taxable distribution and subject to the 10% early withdrawal penalty.

When you roll over a 401(k) into a traditional IRA, the money keeps its tax-deferred status. If your old 401(k) contained both pre-tax and after-tax contributions, the after-tax portion may need to go into a separate account or be handled according to IRS rules — Bank of America can walk you through this when you initiate the rollover.

Fees and investment choices at Bank of America

Bank of America does not charge an annual custodial fee for IRAs held at Merrill Edge. However, you pay investment fees based on what you buy inside the account. If you invest in Merrill Edge mutual funds, you pay the fund's expense ratio. If you buy individual stocks or ETFs, you may pay trading commissions depending on the security and Merrill Edge's current pricing.

Merrill Edge offers a range of investments: mutual funds (including low-cost index funds), exchange-traded funds (ETFs), individual stocks, bonds, and CDs. You can also use Merrill Edge's robo-advisor service, which automatically builds and rebalances a portfolio for you — this service has its own fee, separate from the underlying investment costs.

If you want a simpler, lower-cost option, Bank of America also offers target-date funds through Merrill Edge. These funds automatically shift from stocks to bonds as you approach retirement, and they typically have lower expense ratios than actively managed funds.

Withdrawals and access to your money

In a traditional IRA, you can withdraw money anytime, but withdrawals before age 59½ are subject to a 10% penalty plus income tax on the amount withdrawn. Exceptions include withdrawals for a first-time home purchase (up to $10,000 lifetime), unreimbursed medical expenses, disability, or health insurance premiums while unemployed. At age 73, you must take required minimum distributions each year, calculated by the IRS based on your age and account balance.

In a Roth IRA, you can withdraw your contributions (the money you put in) anytime without penalty or tax. Withdrawals of earnings (investment gains) before age 59½ are subject to the 10% penalty and income tax, unless you meet an exception. Roth IRAs have no required minimum distributions, so you can leave the money untouched as long as you want.

Bank of America processes withdrawal requests through Merrill Edge. You can request a withdrawal online, by phone, or through a branch. The funds typically arrive in your linked bank account within a few business days, though the exact timing depends on the type of investment being sold and market conditions.

How Bank of America compares to other custodians

Bank of America is one of many institutions that hold IRAs. Other large custodians include Fidelity, Charles Schwab, Vanguard, and E-Trade. The account rules — contribution limits, tax treatment, withdrawal penalties — are the same everywhere because they are set by the IRS, not by the bank. The differences lie in fees, investment options, and customer service.

Bank of America's main advantage is convenience if you already bank there — you can manage your IRA alongside your checking and savings accounts. Its main drawback is that Merrill Edge's investment options and fee structure may not be the cheapest compared to competitors like Vanguard or Fidelity, which offer lower-cost index funds and no trading commissions on many securities.

If you are comparing custodians, look at the specific investments you plan to buy and calculate the total cost: the custodial fee (if any) plus the investment fees. A $0 custodial fee means nothing if the funds inside cost more than they would elsewhere.

Frequently Asked Questions

Can I open multiple IRAs at Bank of America?

Yes, you can open both a traditional IRA and a Roth IRA at Bank of America. However, your total contributions across all IRAs of the same type (all traditional or all Roth) cannot exceed the annual limit — $7,000 in 2024, or $8,000 if you are 50 or older. If you open a traditional IRA at Bank of America and another at a different custodian, your combined contributions to both cannot exceed the limit.

What happens to my IRA if I close my Bank of America checking account?

Your IRA is separate from your checking account and will not be closed. However, you will need a way to fund future contributions and receive distributions. You can link a different bank account to your Merrill Edge IRA, or you can visit a Bank of America branch to handle deposits and withdrawals.

Does Bank of America offer employer 401(k) plans?

Bank of America does not administer 401(k) plans for employers. If your employer offers a 401(k), it is managed by a third-party plan provider chosen by your company. If you have questions about your employer's 401(k), contact your HR or benefits department.

Can I convert a traditional IRA to a Roth at Bank of America?

Yes. A Roth conversion moves money from a traditional IRA into a Roth IRA. You pay income tax on the converted amount in the year of the conversion, but the money then grows tax-free. Bank of America can process a conversion, but you should consult a tax professional first because conversions have tax consequences that depend on your overall income and situation.

What if I need to withdraw money before age 59½ for an emergency?

You can withdraw from a traditional IRA anytime, but you will owe a 10% penalty plus income tax on the withdrawal unless you meet an IRS exception (disability, medical expenses, first-time home purchase up to $10,000, or a few others). With a Roth IRA, you can withdraw your contributions without penalty, but earnings withdrawals trigger the penalty and tax. Consider whether a loan or other option might be better before withdrawing from retirement savings.