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Individual Retirement Accounts (IRA)

Traditional IRAs

A traditional Individual Retirement Account (IRA) is a personal savings plan that gives you tax advantages for setting aside money for retirement.

Contributions you make to a traditional IRA may be fully or partially deductible, depending on your circumstances.

Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until distributed.

An IRA is a RETIREMENT ACCOUNT on which the TAX-DEFERRED INTEREST is paid semiannually. A MINIMUM DEPOSIT of $500.00 is required to open the IRA and each subsequent deposit must be at least $100.00. Withdrawals are not permitted before the age of 59 1/2 without penalties being assessed as required by law. Variable rate. Rates subject to change January 1 and July 1 after account is opened.
Roth IRA

A Roth IRA is an individual retirement arrangement that, except as explained below, is subject to the rules that apply to a traditional IRA. It can be either an account or an annuity. Individual retirement accounts.

  • To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is set up. A deemed IRA can be a Roth IRA, but neither a SEP-IRA nor SIMPLE IRA can be designated as a Roth IRA. Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA. But, if you satisfy the requirements, qualified distributions are tax free. Contributions can be made to your Roth IRA after you reach age 70 1/2 and you can leave amounts in your Roth IRA as long as you live.
Education IRA

A Coverdell Education Savings Account is an account created as an incentive to help parents and students save for education expenses.

The total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special needs beneficiary.

The beneficiary will not owe tax on the distributions if they are less than a beneficiary's qualified education expenses at an eligible institution. This benefit applies to higher education expenses as well as to elementary and secondary education expenses.

    Here are some things to remember about Distributions from
    Coverdell Accounts:
  • Distributions are tax-free as long as they are used for qualified education expenses, such as tuition, books and fees
  • There is no tax on distributions if they are for an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law
  • The Hope and lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits
  • If the distribution exceeds education expenses, a portion will be taxable to the beneficiary and will be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship

There are contribution limits for taxpayers based on the taxpayer's Modified Adjusted Gross Income. Contributions to a Coverdell ESA may be made until the due date of the contributor's return, without extensions.

If there is a balance in the Coverdell ESA at the time the beneficiary reaches age 30, it must be distributed within 30 days. A portion representing earnings on the account will be taxable and subject to the additional 10% tax. The beneficiary may avoid these taxes by rolling over the full balance to another Coverdell ESA for another family member.

Fees assessed may reduce the earnings of the account.
FOR INFORMATIONAL PURPOSES ONLY. | Rates subject to change without notice.

For more information, Contact Bradford National Bank.

The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It also includes Interest on Lawyers Trust Accounts (“IOLTAs”). It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts and money-market deposit accounts.
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