Traditional
Roth IRA
With the right plan, retirement can be one of life’s
greatest rewards. With a Traditional IRA with First
South Bank, you pay no taxes on your earnings until
you withdraw 1 them at
retirement.
This site is provided for your information and does
not constitute tax advice. Please consult with your
accountant or tax advisor for specific guidance. Withdrawals
from an IRA made prior to age 59½ may be subject
to a 10% IRS penalty in addition to ordinary income
taxes.
Additional Traditional IRA Benefits:
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Contributions may be tax-deductible.2
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Everyone under age 70½,
with earned income, is eligible to contribute.
There is no income limit.
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By deferring taxes until
you retire, you may gain higher compounded
growth than in a regular investment.
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Choose from variety of
investments to make the most of your contributions,
including stocks, bonds, mutual funds, and
other investments through
UVEST, as well as bank products such as
FDIC-insured CDs and money market accounts.
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When to Consider a Traditional
IRA:
- You are eligible to deduct your contribution
and you anticipate your tax rate at the time
of withdrawal will be lower than your current
tax rate.
- Your Modified Adjusted Gross Income (MAGI)
is too high to contribute to a Roth IRA.3
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Economic Growth and Tax Relief Reconciliation Act of
2001
The Economic Growth and Tax Relief Reconciliation Act
of 2001 changed IRA contribution limits as indicated
below.
IRA Annual Contribution Limits (Traditional
and Roth):
• 2003 through 2004 $3,000
• 2005 through 2007 $4,000
• 2008 and thereafter $5,000 (indexed beginning
in 2009)
IRA Catch-up Contributions (Traditional and
Roth)2:
• 2003 through 2005 $500
• 2006 and thereafter $1,000
Required Minimum Distributions (RMDs)
Traditional, SEP, and SIMPLE IRAs are tax-deferred accounts.
IRA regulations state that holders of these IRAs must
begin RMDs at age 70½. The first required distribution
must be taken by April 1 of the year following attainment
of age 70½. After the first distribution, annual
RMDs must be taken by December 31 of each year. Failure
to take the RMD may result in a 50% IRS tax penalty
on the difference between the RMD and the amount actually
withdrawn. Roth IRAs are exempt from required distributions
during the owner’s lifetime.
Want to determine how much money you
will need to retire. Use one of our calculators.
For more information on Personal Finance
Options, click
here to send us your questions, or contact us at
1-800-946-4178.
1 Withdrawals from an
IRA made prior to 59½ may be subject to a 10%
IRS penalty in addition to ordinary income taxes.
2 Contributions may not
be tax-deductible for those covered by employer-sponsored
retirement plans with incomes over certain levels. Spouses
of retirement plan participants who are not covered
by an employer plan are eligible for the tax deduction
at higher income limits. Withdrawals prior to age 59½
may be subject to a 10% IRS penalty and additional ordinary
tax.
3 Exceeds $160,000 for
married taxpayers or $110,000 for single taxpayers.
Partial contributions allowed for Roth IRAs between
$95,000—$110,000 if single and between $150,000—$160,000
for married, filing jointly.
4 IRA holders age 50 or
older may contribute additional amounts in excess of
the basic annual contributions.
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