IRA – Individual Retirement Account

Typically these accounts are key components to one’s retirement plan and are an excellent way
to meet your financial goals. Each type of IRA account has different rules that the account
holder must satisfy to receive the tax advantage. You can put your IRA into a regular IRA
account or into an IRA certificate of deposit (CD) to earn a higher rate.

Traditional IRA
This account can provide an immediate tax benefit for qualifying account holders. To be eligible,
you must be under age 70 1/2 at the end of the calendar and have some form of compensation
(wages, salaries, bonuses, and commissions) to contribute. Withdrawals from a Traditional IRA
cannot begin until age 59 1/2 without penalty, and it is mandatory that the account holder begins
withdrawals the same year he or she turns 70 ½. Withdrawals from the account are subject to
federal income taxes.

Roth IRA
Contributions to a Roth IRA are not tax deductible. However, withdrawals are tax-free if the
account has been opened for at least five years and the account holder has reached age 59 ½.
There is no mandatory withdrawal age. Eligibility is still subject to income limitations. You are
entitled to withdraw from your IRA entirely tax free at age 59 ½.
The maximum total contribution to both Traditional and Roth IRAs is $5,500 for an individual or
$11,000 for a married couple filing jointly. In addition, those over the age of 50 may contribute
an extra $1,000 per year.