Individual Retirement Accounts
Understanding Your Options
We at Thomaston Savings Bank are proud that we have
an experienced staff to help you make those tough
decisions involved in saving for your retirement. You’ve
made the commitment to save for your future. Of Course,
an IRA may be the perfect savings vehicle for you. And
never before have individuals had so many IRA savings
choices. Now, you may be eligible to choose from both
Roth and Traditional IRAs.
- 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be withdrawn tax-free.
Both types of IRAs are attractive, and choosing can
certainly be difficult. So, a good place to start is
often by determining what options are available to you.
Traditional and Roth IRAs
Before you determine your eligibility to contribute
to a deductible Traditional IRA or Roth IRA, you may
find it helpful to review the following summaries about
how Traditional and Roth IRAs work.
Traditional IRAs
- ● Often, contributions
are 100% deductible.
- ● Earnings grow
Tax-deferred.
- ● Distributions are
generally taxable, but penalty-free if withdrawn
under one of the following circumstances:
| ●
attaining age 59 1/2 |
| ●
incurring a disability |
●
payment for certain health insurance,
medical
expenses and higher education expenses |
| ●
payment for a first home purchase |
| ●
taking equal, periodic payments |
| ●
death (payments to beneficiaries) |
| ●
IRS tax Levy |
Distributions are required to be taken by Traditional
IRA holders beginning at age 70 1/2.
Roth IRAs
- ● Contributions are
never deductible.
- ● Earnings can grow
tax-free.
- ● Contributions can
generally be distributed tax-free at any time.
- ● Earnings can
be distributed tax-free if the Roth IRA holder first
made a
- Roth IRA
contribution at least five years ago AND one of the
following
events occurs:
|
· attaining age
59 1/2 |
|
· incurring a
disability |
|
· purchasing a
first home |
|
· death
(payments to beneficiaries). |
Distributions are not required to be taken by Roth
IRA holders at age 70 1/2.
New IRA Rules
|
(Effective January 1, 2002) |
The Economic Growth and Tax Relief Reconciliation Act
of 2001 (EGTRRA) has brought the most sweeping changes
to Individual Retirement Arrangements (IRAs) in nearly
two decades.
“Greater opportunities for increasing your retirement
savings”
·
Increased
contributions for Traditional and/or
Roth IRAs beginning in 2002. |
· Catch-up
contributions allowed for IRA holders
age 50 and older. |
|
· Tax credits
available for certain limited income
taxpayers. |
·
Increased
contributions for Coverdell Education
Savings Accounts (ESAs) beginning in 2002. |
Required Minimum Distributions
· Easier Required
Minimum Distribution (RMD)
calculations, starting in 2002. |
Call us today! Our Customer Service
Representatives will be happy to discuss the benefits of
IRA savings. |
