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Individual Retirement Accounts (IRAs)

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WHY AN IRA?

An Individual Retirement Account allows you to save money for retirement, as well as receive a tax advantage. This is a savings account that allows you to make deposits, up to a certain amount per year, based on age and income. It is a great way to get started toward your retirement goals! So, start saving for your future today, by opening the IRA that fits your needs and sustains your future dreams.

TYPES OF IRA'S:

TRADITIONAL IRA

This type of retirement savings account allows you to contribute pre-tax dollars to a retirement account, whereas investments grow tax-deferred. Upon retirement, withdrawals are taxed at your current income tax rate.

ACCOUNT FEATURES
  • Pays monthly dividends
  • No annual fees
  • Contribution limits exist:
    • $6,000 for those under the age of 50
    • $7,000 for those 50 and older
  • Minimum distributions (withdrawals) must begin at age 72
  • Unqualified distributions (withdrawals) prior to the age of 59.5 are subject to income tax, and a 10% early withdrawal penalty
  • Account grows tax-deferred until withdrawals
  • Owner of IRA must have earned income to contribute

ROTH IRA

This type of retirement savings account allows you to set aside after-tax dollars up to a specified amount each year. Earnings on the account, as well as withdrawals after the age of 59.5 are tax-free. Therefore, you pay tax on the money prior to making contributions, and all future gains and withdrawals are tax free.

ACCOUNT FEATURES
  • Pays monthly dividends
  • No annual fees
  • Single filers cannot contribute if you earn more than $144,000/year
  • Married couples filing jointly cannot contribute if you earn more than $214,000/year
  • Contribution limits exist:
    • $6,000 for those under the age of 50
    • $7,000 for those 50 and older
  • Withdrawals are tax free after age 59.5, assuming the account has been open for at least 5 years
  • Account grows tax-free
  • The owner of the IRA must have earned income to contribute

HOW TO OPEN AN IRA 

If you are an existing member, an IRA can be opened at any of our branch locations, and there is a minimum deposit of $25.00 to open.

If you are a non-member, and wish to open an IRA with us, you can stop into one of our branch locations. In order to open an IRA, you must be eligible for membership, and become a member by opening a Member Savings Account of at least $25.00. There is also a $25.00 minimum deposit in order to open the IRA.

TRADITIONAL VS. ROTH IRA

There are advantages to both Traditional and Roth IRAs. One of the biggest differences between the two is the time at which you see the most advantage. A Traditional IRA provides potential tax relief today, while a Roth IRA has the potential for the most tax benefit at time of retirement.

Traditional IRA

  • Tax-deferred earnings
  • Contributions may be tax deductible
  • Best option when rolling over your pension or 401(k)

ROTH IRA

  • Contributions are not tax deductible
  • Tax-free earnings
  • Tax-free qualified withdrawals
  • More flexible access to funds than traditional IRA

COVERDELL EDUCATION SAVINGS ACCOUNT (ESA)

Higher education can become a financial burden. A Coverdell Education Savings Account (ESA) is designed to help lighten the load.

  • Set aside funds for your child's education
  • Dividends grow tax-free*
  • Withdrawals are tax-free and penalty-free when used for qualifying education expenses*
  • Designated beneficiary must be under 18 when contributions are made
  • To contribute to an ESA, certain income limits apply*
  • Contributions are not tax deductible
  • Contributions are allowed regardless of traditional or Roth IRA participation
  • $2,000 maximum annual contribution per child
  • The money must be withdrawn by the time he or she turns 30
  • The ESA may be transferred without penalty to another member of the family
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*Consult a tax advisor.

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