Traditional IRA

Individual retirement accounts allow tax-deferred saving for retirement. The traditional IRA is an account which allows you to defer taxes on your earnings until they are withdrawn.

• Tax benefits
• Defer taxes on your earnings until they are withdrawn
• Certain contributions are tax deductible in the tax year for which they are made
• Eligibility to establish
• Must be under age 70 ½ for the entire tax year and have earned income (or your spouse has earned income)
• 2013 Contributions
• $5,500 or up to 100% of your compensation, whichever is less
• $5,500 is the aggregate amount you can contribute to any IRA in a given year
• Earned income is required to open an IRA
• Non-income-earning spouse of income earners can open individual IRAs
• If you are age 50 or older, you can make an additional “catch up” contribution
  of $1,000.
• Withdrawals
• Must take minimum required withdrawals at age 70 ½ or severe penalties will be imposed
• 10% IRS premature distribution penalty for non-qualified distributions
• Qualified distributions
• Distributions made on or after the date you reach age 59 ½
• Distributions made to your beneficiary or your estate upon your death
• Distributions if you become disabled
• Distributions for qualified first-time home buyers (up to $10,000)
• Distributions for medical expenses in excess of 7.5% of your adjusted gross income
• Distributions for health care insurance if you’ve been receiving unemployment compensation for at least 12 weeks
• Distributions are for higher education expenses

Roth IRA

Individual retirement accounts allow tax-deferred saving for retirement. The Roth IRA is a nondeductible account that features tax-free withdrawals for certain distribution reasons after a five-year holding period.

• Tax benefits
• Non-deductible account
• Tax-free withdrawals after a 5-year period
• Eligibility
• Must have earned income (or your spouse must have earned income)
• Modified adjusted gross income cannot exceed certain limits. See contributions below
• 2013 Contributions
• Modified Adjusted Gross Income levels
• Single filers
• $112,000 or less: Full $5,000 contribution
• Between $112,000 and $127,000: Partial contribution
• $127,000 or more: No contribution
• Married, joint filers
• $178,000 or less: Full $5,000 contribution
• Between $178,000 and $188,000: Partial contribution
• $188,000 or more: No contribution
• $5,500 is the aggregate amount you can contribute to any IRA in a given year
• If you are age 50 or older, you can make an additional “catch up” contribution of $1,000.
• Withdrawals
• No minimum required withdrawals
• Must meet five-year holding period, which begins with the tax year for which the first contribution is made
• After holding period, withdrawals for qualified distributions are tax tree and IRA penalty free
• Qualified distributions
• Distributions made on or after the date you reach age 59 ½
• Distributions made to your beneficiary or your estate upon your death
• Distributions if you become disabled
• Distributions for qualified first-time home buyers (up to $10,000)
• The 10% penalty for early withdrawal is waived for the following distributions, but for these distributions, taxes on any earnings will apply
• Distributions for substantially equal periodic payments
• Distributions for eligible medical expenses in excess of 7.5% of your adjusted gross income
• Distributions for medical insurance premiums for eligible unemployed individuals
• Distributions for qualified education expenses
• Distributions taken within the first five years for any of the following
• Age 59 ½
• Death
• Disability
• First-time home purchase
• Distributions taken for any reason other than a qualified reason or one of the reasons listed here are subject to both taxes and a 10% IRS penalty on any earnings withdrawn

Rollover IRA

Individual retirement accounts allow tax-deferred saving for retirement. CornerBank can help you decide if the Rollover IRA is right for you.

Rollover retirement plans from a previous employer into either a Roth or Traditional IRA. Contact us for assistance in rolling over your retirement funds.