IRA (Individual Retirement Accounts)
A Tradional IRA is a special tax deferred savings plan authorized by the Federal Government to encourage you to accumulate money for retirement. Individuals who are under 70 1/2 years of age for the entire tax year and have earned compensation or received alimony may contribute to a Traditional IRA.
All earnings you accumulate in your IRA remain tax deferred until you make withdrawals from the account. You may withdraw funds from your IRA any time after you reach age 59 1/2. Distributions taken prior to age 59 1/2 are generally subject to a 10% early withdrawal penalty unless certain exceptions apply.
A Roth IRA is an individual retirement account to which participants are able to make annual non-deductible contributions. Unlike a Traditional IRA in which your earnings are tax deferred, Roth IRA earnings can be tax free. With the Roth IRA you can continue to make contributions even after you have reached age 70 1/2, provided you have earned income. You can withdraw funds from your Roth IRA at any time without tax and penalty free. "Qualified distributions" may be withdrawn tax and penalty free. "Non Qualified Distributions" may be taxable and subject to an IRA 10% early distribution penalty.
To be considered a "Qualified distribution," the following characteristics MUST apply:
You have been a participant in the Roth IRA for over five years, beginning with the first year in which the account was converted or a contribution was made, AND...
- you have reached age 59 1/2 OR
- the distribution is paid to a beneficiary due to your death
- the distribution is paid following your becoming permanently and totally disabled
- the distribution is paid to you for the first time purchase of a home up to $10,000
You can open or fund your IRA anytime until your federal tax return is due, which is normally, April 15 of the following year,
excluding extensions. You are permitted to annually contribute the following maximum amounts or 100% of your earned
compensation and alimony, whichever is less. Always seek the advice of a tax advisor before making a contribution or distribution
from your IRA.
Our Traditional and Roth IRA terms are set up on either a 12 month fixed or 18 month variable rate.