Individual Retirement Accounts

To help you save for lifetime goals, there are a variety of tax-advantaged or tax-deferred accounts from which to choose. There are three types of IRAs; Traditional, Roth, and Educational. Each type of IRA can be invested in a Variable IRA Account or IRA Share Certificate.

Variable IRA Account

• No minimum balance required.
• Open plateau account.
• Competitive dividend rates.
• Dividends are calculated daily and paid quarterly.
• Quarterly statements.

IRA Share Certificate

• Varying terms.

• Competitive dividend rates.

• Dividends are calculated daily and paid quarterly.

• Penalty for early withdrawal of funds.

• Quarterly statements.

The different types of IRAs…

How are they Different?

Traditional IRA – In this IRA, contributions you make to the account are often tax deductible and taxed upon withdrawal. This allows you to defer taxation until your retirement when you may be in a lower tax bracket.

Roth IRA – This is the newest type of IRA created by the Tax Payer Relief Act of 1997. Contributions you make now are NOT tax-deductible, but can be withdrawn tax and penalty free at any time. Earnings can be withdrawn tax and penalty free for certain reasons after five tax years. If you do not need the immediate tax break or expect to be in a higher tax bracket when you retire, this may be the account for you.

Education IRA – This IRA allows individuals to save money for a child’s higher education on a tax-favored basis.  Withdrawals are tax and penalty free only for qualified higher education expenses. Earnings are subject to tax and penalty for other withdrawals.

 What are the eligibility requirements and how much can I contribute per year?

Traditional IRA – You must be under 70 ½ years of age the entire tax year and have earned income to be eligible for the Traditional IRA. Even if you do not have earned income, you are still eligible as long as your spouse has earned income that year. You may contribute, per tax year, up to 100% of your earned income or $4,000, whichever is less.

Taxpayers who are age 50 or older by the end of a tax year may be eligible to make "catch-up" contributions of an additional $500 for that year.

Roth IRA – This account does not have an age restriction, however you must still have earned income in the tax year for which you would like to contribute, AND your modified adjusted gross income (MAGI) cannot exceed certain limitations.

Taxpayers who are age 50 or older by the end of a tax year may be eligible to make "catch-up" contributions of an additional $500 for that year.

Single Filers
MAGI of $95,000 or less	MAGI between $95,000 and $110,000	MAGI of $110,000 or more
Full $4,000 Contribution	Partial Contribution	No Contribution
Married or Joint Filers
MAGI of $150,000 or less	MAGI between $150,000 and $160,000	MAGI of $160,000 or more
Full $4,000 Contribution	Partial Contribution	No Contribution

* Please note that you CAN contribute to BOTH a Roth and a Traditional IRA each tax year, but the total combined contribution must not exceed the $4,000 limit.

Educational IRA – Contributions can be made for a child under the age of 18. Contributions are not allowed in any year that a contribution is made to a state tuition program for the same IRA beneficiary. The aggregate contribution of behalf of any one child in a given tax year is $2,000. Your Modified Adjusted Gross Income (MAGI) cannot exceed certain limitations.

Single Filers
MAGI of $95,000 or less	MAGI between $95,000 and $110,000	MAGI of $110,000 or more
Full $2,000 Contribution	Partial Contribution	No Contribution
Married or Joint Filers
MAGI of $150,000 or less	MAGI between $150,000 and $160,000	MAGI of $160,000 or more
Full $2,000 Contribution	Partial Contribution	No Contribution

When MUST I take distributions from my IRA and how do I withdraw funds without any tax penalty?

Traditional IRA – You MUST begin taking distributions from a traditional IRA at age 70 ½ or you may face penalties. However, you can begin to withdraw your funds without the 10% IRS tax penalty for early withdrawal after age 59 ½ or for certain qualified distributions.

Roth IRA – There is no required minimum distribution rule on the Roth IRA; therefore, you may leave your money in a Roth IRA as long as you want. Contributions can be withdrawn tax and penalty free at any time. After the account has been opened five tax years, earnings can be withdrawn tax and penalty free for any of these reasons: after age 59 ½, disability, death, or a first time home purchase.

Education IRA – Distributions for a higher education expense are penalty free and tax free when withdrawn for a qualified education expense.