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Retirement Savings Accounts

Traditional IRA

Traditional IRA is a savings account for retirement purposes. Individuals cannot withdraw their funds from a Traditional IRA until they reach age 59 1/2 . The IRS imposes a 10% penalty on early withdrawals.

Often, contributions to an IRA are tax deductible, so a person will not pay taxes on the amount contributed to the IRA until funds are withdrawn. Individuals can contribute up to $5,500 per year to an IRA. Individuals who are fifty years of age or older are permitted to contribute up to $6,500 per taxable year. Upon reaching age 70 1/2, members must begin taking distributions.

Roth IRA

Roth IRA differs from the Traditional IRA in that the contributions are not tax deductible. Also, the interest earned on funds in a Roth IRA is not taxed upon withdrawal when certain conditions are met. In addition, contributions may be withdrawn at any time without taxation.

In order to avoid paying a penalty, individuals must hold the account for at least 5 years and be at least 59 1/2 years of age. If you are not 59 1/2, but have held the account for five years, you could withdraw contributions and earnings tax free for the following reasons: disability, first time home purchase, or death.

To open a Traditional, Roth, or Roth Conversion IRA or Certificate, contact Member Services at 410-828-4730.



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