An Individual Retirement Account (IRA) is an excellent tool for retirement savings. Unlike most investments, depending on the type of IRA you choose, contributions may be tax deductible and will grow either tax-deferred or tax-free. In addition there are general rules that are prescribed for IRAs and are grouped under three broad categories that include eligibility, contributions, and withdrawals. At Liberty State Bank, we offer both Traditional and Roth IRAs to meet your retirement needs.
|Eligibility||The owner must be under the age of 70½, and must have some form of compensation to contribute.|
|Contributions||The annual contribution limit is $5,500 under age 50 ($6,500 over age 50) for 2016. This contribution limit can be adjusted annually for inflation in $500 increments. Contributions are tax deductible if you are not an active participant in an employer retirement plan. Deductibility may be limited if you or your spouse are an active participant in an employer retirement plan. Contributions and Interest earned grow on a tax-deferred basis.|
|Withdrawals||An owner must be age 59½ before making a withdrawal from a traditional IRA without incurring an additional 10% tax penalty. There are several exceptions that allow an owner to avoid the tax penalty for early withdrawals such as, qualified higher education expenses, certain qualified first-time homebuyer amounts, or significant unreimbursed medical expenses among other exceptions (check with a financial advisor for all the details on early withdrawals). Earnings are taxed only upon withdrawal or distribution. Distributions must begin at age 70½.|Eligibility
An owner must have earned income to establish and contribute to a Roth IRA. There is no age limit or restriction.
The maximum contribution rules are the same as for a traditional IRA even after age 70½. Contributions to Roth IRAs are not tax deductible.
Qualified distributions can be made after a five year taxable period is reached and the owner must be 59½ years of age. Early withdrawals are allowed if the owner becomes disabled or for first time homebuyers (check with a financial advisor for all the details on early withdrawals). There is no minimum required distribution for Roth IRAs.
|•||Contributions often are tax-deductible.||•||Contributions are not deductible.|
|•||Earnings grow tax-deferred.||•||Earnings grow tax-deferred.|
|•||Distributions generally are taxable.||•||
Contributions generally can be distributed
|Distributions before you reach age 59½ are subject to penalty unless you meet an early distribution penalty exception.||•||Earnings can be distributed tax-free if the
Roth IRA holder first made a Roth IRA
contribution at least five years ago, AND is age 59½ disabled, deceased, or paying first-time homebuyer expenses.
|•||Required minimum distributions must begin at age 70½.||•||Distributions are not required until after the Roth IRA holder dies.|
Please contact one of our representatives to start a retirement account today.