HELPING YOU TO ACHIEVE YOUR FINANCIAL GOALS

Individual Retirement Account

Retirement may seem far away, but it’s never too early to determine how much you’ll need and to begin the process of saving. Making smart financial decisions now can help impact how you live in retirement. We can assist you along the way with our Individual Retirement Account (IRA) program—it’s designed to help you reach your retirement goals.

An IRA is a tax-deferred personal savings account that allows you to save for retirement without a company-sponsored plan. Throughout your lifetime, you can make tax-deductible “contributions” to your IRA, which you can then invest in basic securities such as stocks and bonds. The Maximum annual amount you can contribute could be changed every year or the lesser of 100% of earned compensation of that limit. If you are age 50 or older, you are eligible to contribute an annual “catch-up” contribution each year of up to the desired limit of that year.

With a traditional IRA—the most common type of IRA—income taxes are deferred until you withdraw them, so you don’t pay annual federal (and, in many cases, state) income taxes on your earnings. At age 59 ½, you can make taxable withdrawals from the account called distributions for your retirement. If you choose to take distributions before you turn 59 ½ years old, the government imposes a premature distribution penalty of 10% on your withdrawal. Additionally, when you turn 70 ½ years old, you are required to take distributions by April 1 of the calendar year.

 Roth IRA Account

Unlike the traditional IRA, contributions to the Roth IRA are considered “after-tax” and therefore not deductible, but you can take distributions from the Roth IRA tax-free. The Maximum annual amount you can contribute could be changed every year or the lesser of 100% of earned compensation of that limit. If you are age 50 or older, you are eligible to contribute an annual “catch-up” contribution each year of up to the desired limit of that year.

The Roth IRA became an option after the Taxpayer Relief Act of 1997, and allows for investors filing single on their taxes with a modified adjusted gross income as per the set limit of the contributing year, to make limited, annual contributions toward retirement. There is no mandatory age at which you are required to take distributions from the Roth IRA, and there is no premature distribution penalty for amounts you withdraw from the principal.

Coverdell Education Savings Account (ESA)

The Coverdell Education Savings Account or Education IRA is a trust created exclusively for the purpose of paying qualified education expenses. You can contribute within the limit per year to the account and those contributions will grow tax-free until distributed. In addition, the beneficiary will not owe tax on the distributions if they are less than a beneficiary’s adjusted qualified education expenses at an eligible institution. 

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