IRA Overview

It's no secret that social security funds won't be there for you the way they are for your parents and grandparents. An Individual Retirement Account (IRA) is a special savings plan authorized by the Federal government to assist consumers with the accumulation of funds for retirement.

Benefits:

• It allows every wage earner to build a substantial retirement fund and defer taxes on both the principal and the accrued interest each year.
• After meeting a specific initial time period, funds can be withdrawn for the purchase of a customer's first home and college education expenses.

Types of IRAs

A variety of IRA products exist and provide different benefits based on a variety of customer needs.

• The Traditional IRA - earnings are tax-deferred and contributions can provide an immediate tax benefit as a deduction when filing tax returns. Government penalties exist for early withdrawals
• The Roth IRA - earnings are tax-free at the time of withdrawal. Good for individuals who do not need the tax advantage in the current year
• Education IRA - allows for tax fee withdrawals for a child's higher education expenses. (Maximum contribution is $2000.)
• Alternative Investments - IRAs are not limited to bank products. Alternative investments can also be designated as an IRA. Investment IRAs are available through our licensed Investment Representatives. (Securities and Insurance are not FDIC Insured, may lose value, and are not guaranteed by the bank.)
• IRAs can be a fixed rate CD or variable rate account with the ability to make subsequent deposits similar to a savings account.

There are many regulations that govern IRA contributions, funding, distributions, and tax implications.

Contributions:

In general, earned income is required to make IRA contributions. Anyone can make a contribution in any amount. However, tax deductibility will vary based on whether you are an individual or married and on your income level. Deductibility amounts will be increasing significantly over the next 10 years.

Contributions can be made to multiple IRA types but it cannot exceed the overall maximum limit.

Distributions:

Distributions can be taken at age 59½ without a government penalty. They are required at age 70½ for Traditional IRAs but not for Roth.

Please contact one of our IRA Specialists for more details on IRAs.