Investing for Tomorrow
Few things are more important than financial security in your retirement years. You’ve worked hard, so we want to help make your future as worry-free as we can. To help you save for your retirement, we offer several different types of Individual Retirement Accounts (IRAs).
These plans offer different tax advantages, including tax-deferred and even tax-free earnings. Take a look at your options. If you have questions — or you’re ready to get started — contact us or stop by your local CSB branch.
A Traditional IRA is any IRA that is not a Roth IRA, a SIMPLE IRA or a Coverdell Education Savings Account. This was the original IRA.
There are two advantages of a traditional IRA:
- You may be able to deduct some or all of your contributions to it, depending on your circumstances.
- Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed.
Unlike a Traditional IRA, you can’t deduct contributions to a Roth IRA. However, if you satisfy the requirements, qualified distributions are tax free.
Other advantages include:
- Contributions can be made to your Roth IRA after you reach age 70½.
- You can leave amounts in your Roth IRA as long as you live.
To be a Roth IRA, the account must be designated as such when it is set up. Neither a SEP-IRA nor a SIMPLE IRA can be designated as a Roth IRA.
Coverdell Education Savings Account (CESA)
The CESA, formerly the Education IRA, is not really an IRA at all. It was created as part of the Taxpayer Relief Act of 1997 to help families save for their children’s college.
Distributions from the IRA are tax-free and penalty-free for qualified higher-education expenses. The CESA allows annual aggregate contributions of $2,000 per child.
Simplified Employee Pension (SEP) IRA
A SEP is a written arrangement (a plan) that allows an employer to make deductible contributions for the benefit of participating employees. The contributions are made to a Traditional IRA set up for a participant in the plan.
Self-employed individuals as well as other employers can set up SEP plans. A SEP plan allows an employer to make contributions toward employees’ retirement and, if self-employed, his or her own retirement, without becoming involved in more complex retirement plans.