Individual Retirement Accounts


What is an IRA?

An Individual Retirement Account (IRA) is a special savings plan authorized by the Federal government to help individuals accumulate funds for retirement.

  • Traditional IRAs - Under this arrangement, contributions may be partially or fully deductible, but distributions are generally taxable. 
  • Roth IRAs - With Roth IRAs, contributions are not deductible, but distributions can generally be withdrawn tax-free.

Who Can Contribute?

Anyone who has earned income or received alimony and falls within the modified adjusted gross income limits may contribute to an IRA. Income from other sources, such as investments or inheritances, does not qualify. You cannot make regular contributions to a traditional IRA if you are age 70½ or older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

How Much Can I Contribute?

For 2016, the maximum you can contribute to all of your traditional and Roth IRAs is the lesser of $5,500 ($6,500 if you are age 50 or older) or your taxable compensation for the year.

For 2017, the maximum you can contribute to all of your traditional and Roth IRAs is the lesser of $5,500 ($6,500 if you are age 50 or older) or your taxable compensation for the year.




Coverdell Education Savings Accounts

What is a Coverdell Education Savings Account?

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

The total contributions for the beneficiary 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.

Contributions to a Coverdell ESA are not deductible, but earnings grow tax-free until distributed. Distributions are tax-free as long as they are used for qualified education expenses, such as tuition and fees, required books, supplies and equipment and qualified expenses for room and board.


For more details, contact a Personal Banker at 608-824-3200.