IRA stands for an Individual Retirement Account. 

There are two main types of IRAs: Roth IRAs and Traditional IRAs. 

A Roth IRA is a tax-deferred Individual Retirement Account, with nondeductible contributions. 

A Traditional IRA is a tax-deferred Individual Retirement Account, typically with tax deductible or pre-tax contributions. 

There are also SIMPLE IRA plans, which can be set up by small employers to allow them and their employees to contribute to traditional IRAs in place of another sponsored retirement plan. 

There are two main types of IRAs: Roth IRAs and Traditional IRAs. A Roth IRA is a tax-deferred Individual Retirement Account, with nondeductible contributions. A Traditional IRA is a tax-deferred Individual Retirement Account , typically with tax deductible or pre-tax contributions.

There are also SEP IRAs and SIMPLE IRA plans which can be set up by self-employed individuals or small employers to allow them and their employees to contribute to traditional IRAs in place of another sponsored retirement plan.

Individuals of any age who have earned income from work or other compensation (as defined by the IRS to mean wages, salaries, commissions, self-employment income, alimony and separate maintenance, and nontaxable combat pay) can open a Roth IRA, assuming their income is below a certain IRS level. A Traditional IRA can be opened and contributions can be made if an individual has taxable compensation, as defined above. There is no age limit on contributing to either type of IRA.

For the 2022 tax year, the IRS due date is generally April 18, 2023 to be able to select prior year status. For the 2023 tax year, contributions to IRAs must be made by April 15, 2024 to be able to select prior year status. The due date may be different for state income tax purposes. Please consult a professional advisor for tax, legal and investment advice and refer to IRS Publications 590-A and 590-B, “Individual Retirement Arrangements (IRAs),” available online at irs.gov.

Tax-Deferral. Any earnings within the account are tax deferred while in the account. That means an individual does not have to pay annual taxes on such income and capital gains, if any.

Tax-Free Withdrawals. Withdrawals of amounts contributed to a Roth IRA are not taxable. Withdrawals of any income earned within the account can also be tax free, provided the account holder has reached age 59 ½ and has held the Roth IRA for at least five years. Withdrawals of any gains prior to age 59 ½ or not meeting the five-year requirement may be taxable, and subject to an additional 10% federal income tax penalty unless an exception applies.

Individuals can contribute up to $6,000 per year for 2022 and $6500 per year for 2023 to an IRA, assuming they have taxable compensation of at least that amount. Total contributions to Roth and Traditional IRAs must not exceed these amounts. Individuals age 50 or over may make additional catch-up contributions of up to $1,000 for each year, assuming they have taxable compensation of at least that amount.**

In addition to the general contribution limit that applies to both Roth and Traditional IRAs, your ROTH IRA contributions may be limited based on your filing status and income. Individuals may make the maximum Roth contribution if they have taxable compensation and modified gross income of less than $129,000 in 2022 or $138,000 in 2023 and file as single, head of household, or married filing separately. Married couples filing jointly or individuals filing as a qualifying widow(er) may make the maximum Roth contribution if they have taxable compensation and modified adjusted gross income of less than $204,000 in 2022 and $218,000 in 2023.

Please consult a professional advisor for tax, legal and investment advice and refer to IRS Publications 590-A and 590-B, “Individual Retirement Arrangements (IRAs),” available online at irs.gov.

**Note: You cannot contribute more in a year than you earn.

Tax-Deferral. Any earnings within the account are tax deferred while in the account. That means an individual does not have to pay annual taxes on such income and capital gains, if any, which is a potential tax benefit. Withdrawals prior to age 59 ½ may be subject to an additional 10% federal income tax penalty.

Tax-Deductible Contributions. Annual contributions may be tax-deductible if the individual or spouse has not participated in their employer’s qualified retirement plan, such as a 401(k) plan, at any time during the tax year, or if their modified adjusted gross income is below a certain threshold. Social security benefits received may adversely affect deductibility of contributions.

Withdrawals, sometimes called “Required Minimum Distributions” (RMDs) generally must begin when the owner of a Traditional IRA from age 72 to age 73 as of January 1, 2023, or earlier in the case of an inherited IRA. Withdrawals from Traditional IRAs generally are taxable as ordinary income, except for non-deducted/post-tax contributions, if any. Although Roth IRAs are not subject to required minimum distribution rules, inherited Roth IRAs are subject to minimum required distribution rules.

If you own a Traditional, SEP or SIMPLE IRA, the SECURE 2.0 Act, signed into law in December 2022, includes a provision increasing the age when Required Minimum Distributions (RMDs) must begin from age 72 to age 73, effective January 1, 2023.  If you turn 72 in 2023, there is no RMD until 2024.  For 2024, you can either take your RMD by December 31, 2024, or delay taking it until no later than April 1, 2025. However, if you delay your first RMD to April 1, 2025, you will need to take two RMDs in one tax year: your first by April 1, 2025, which satisfies your required withdrawal for 2024, and your second by December 31, 2025, which satisfies your required withdrawal for 2025.  Failure to take your RMD could result in a penalty tax of up to 25%.

Please consult a professional advisor for tax and other advice. 

Think of your Domini IRA as a community of caring individual investors who come together to make an impact based on shared values. They share the view that what’s good for human dignity and ecological sustainability can also be good for their personal prosperity too. At Domini, we use three tools to build a better tomorrow – applying our impact standards to all of our investment portfolios, using our voice as owners seeking to create positive change in companies, and investing to help communities fill gaps left by traditional finance. 

Domini mutual funds focus exclusively on impact investing. An IRA from Domini offers one very important advantage: peace of mind. We only invest in companies that meet our proprietary social and environmental standards. In fact, our Impact Investment Standards are the foundational framework that guide our research and analysis. They are applied consistently across all our funds because we believe that is how all investing should be done. 

This means we seek to verify that a company’s core business model is aligned with our goals of universal human dignity and ecological sustainability before we invest in it. And it also means we evaluate a company’s relations with its key stakeholders, including ecosystems; local, national, and global communities; customers; employees; suppliers; and investors. 

There is an annual $15 Domini IRA maintenance fee for Domini IRA accounts, and an annual paper delivery fee may apply. In addition, although the Domini Impact Equity Fund, Domini International Opportunities Fund, Domini Sustainable Solutions Fund, Domini Impact International Equity Fund, and the Domini Impact Bond Fund investor class shares are no load, certain fees and expenses apply to an investment. These are described in the Domini Funds’ prospectus.