IRA's

Individual Retirement Accounts (IRA’s)

An Individual Retirement Account (IRA) is a unique savings plan designed to help you save for your retirement years.

There are two types of IRA's, the Traditional and the Roth.  You can open an IRA or make annual contributions until April 15th of the following year.

Traditional IRA

The Traditional IRA allows you to defer taxes on your earnings until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which they are made. If you have earned income, you may make a contribution until you reach age 70 1/2, and if you are not covered by an employer-sponsored retirement plan, your contribution is 100% deductible.  You may contribute 100% of your earned income up to $5000.00 annually subject to cost of living adjustments. If you are over 50 years of age, you are allowed an additional $1000 catch-up contribution. The balance will continue to grow tax-deferred.

Early withdrawals are allowed for certain reasons and may be penalty-free.  Withdrawals are allowed anytime after you reach the age 59 1/2 and must begin no later than April 1st following the year in which you turn 70 1/2.  You will pay income taxes only on the amount you withdraw.  The balance will continue to grow tax-deferred.

Roth IRA

The Roth IRA is a nondeductible account that features tax-free withdrawals for certain reasons after a five year holding period. Since Roth contributions are nondeductible and taxed in the year they are earned, people who expect to be in a higher tax bracket when they retire may benefit more from these accounts than from a Traditional IRA.

You are eligible to contribute to a Roth IRA if you have earned income, at any age.  You may contribute 100% of your income up to $5000.00 annually subject to cost of living adjustments. If you are over 50 years of age, you are allowed an additional $1000 catch-up contribution.  If you are married, you must file jointly and your modified adjusted gross income (MAGI) cannot exceed certain limits.

You can always withdraw your principal tax-free and IRS penalty free for any reason.  Unlike a Traditional IRA, you never have to take withdrawals from your Roth IRA.

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