Individual Retirement Accounts (IRAs)

Details:

• Competitive dividends above standard savings rates
• Traditional and Roth IRA options
• Contribution limit varies by government regulations
• Additional $1,000 “catch-up” contribution allowed for ages 50+
• Funds can be used to purchase CDs within IRA

Traditional vs. Roth

There are advantages to both traditional and Roth IRAs. One of the biggest differences 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

• Contribution limit varies by government regulations
• Contributions are tax-deductible on federal income tax*
• Earnings are tax-deferred until withdrawal (when usually in lower tax bracket)
• Withdrawals can begin at age 59½
• Early withdrawals subject to penalty**
• Mandatory withdrawals at age 70½

Roth IRA

• Income limits to be eligible to open Roth IRA***
• Contributions are NOT tax-deductible
• Earnings are 100% tax free at withdrawal*
• Principal contributions can be withdrawn without penalty*
• Withdrawals on dividends can begin at age 59½
• Early withdrawals on dividends subject to penalty**
• No mandatory distribution age
• No age limit on making contributions as long as you have earned income

*Subject to government regulations. Consult a tax advisor.
**Certain exceptions apply, such as healthcare, purchasing first home, etc.
***Consult your tax professional regarding individual circumstances.

Education Savings

Create less financial restraints by setting aside for your child’s education early in a Coverdell Education Savings Account (ESA). And take advantage of a tax-free safe place to grow competitive dividends at the same time.

• Set aside funds for your child’s education
• No setup or annual fee
• Dividends grow tax-free
• Withdrawals are tax-free when used for qualified 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
• $2,000 maximum annual contribution per child
• The money must be withdrawn by the time he or she turns 30***
• The CESA can also be rolled over without penalty to another member of the family
• NCUA insured

*Qualified expenses include tuition and fees, books, supplies, board, etc.
**Consult your tax advisor to determine your contribution limit.
***Those earnings are subject to income tax and a 10% penalty.