It's never too early to start saving for retirement. Individual Retirement Accounts (IRAs) offer tax-free options, flexibility in making withdrawals and more freedom to deduct your contributions. That means you can reach your savings goals easier, smarter and faster than ever before.
Traditional IRA
The traditional IRA is an interest-bearing account that allows your money to compound and grow for future investments or cash at retirement. Contributions to a traditional IRA may be tax deductible and the earnings are tax-deferred until distribution. All Federal Regulations regarding individual retirement accounts (IRAs) apply.
Roth IRA
The Roth IRA is a nondeductible IRA that offers tax-deferred earnings and tax-free distributions. Tax-deferred earnings allow you to grow your nest egg at a faster pace than taxable investments. However, the best part is that they offer tax-free distributions if you follow certain requirements. That means the money you withdraw is yours alone and doesn’t have to be included as income at tax time.
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FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance coverage for depository institutions such as banks and savings and loan associations. The deposit insurance is used to protect deposits in the event the financial institution fails and does not have adequate funds to pay off what it owes to its depositors. The FDIC is an independent agency of the U.S. Government, and FDIC-insured deposits are backed by the full faith and credit of the United States. Visit the FDIC website for additional information.
Beginning in 2011, the coverage limit for all federally insured deposits will be increased for inflation every five years.
Insurance for IRA's - $250,000
The FDIC insurance limit on certain retirement accounts (including IRAs) at insured banks, savings institutions and credit unions is $250,000. This applies to (Traditional, Roth and SIMPLE IRAs).
Also included are self-directed Keoghs, 457 plan accounts for state and local government employees and employer-sponsored defined contribution plans such as 401(k)s that are self-directed. Generally, self-directed means that the employee can choose which insured institution maintains his or her retirement fund deposit.
All of an individual’s deposits at the same insured institution that are in the same broad category of retirement accounts are added together and the total is insured up to $250,000.
IRA FAQs:
Who is eligible to contribute?
Traditional IRA: For years prior to 2020, an individual who is under age 70½ during the entire year and has taxable compensation (or is married filing jointly and his or her spouse has taxable compensation) is eligible. For years after 2019, any individual who has taxable compensation (or is married filing jointly and his or her spouse has taxable compensation) is eligible.
Roth IRA: An individual who has taxable compensation (or is married filing jointly and his or her spouse has taxable compensation) and whose MAGI (modified adjusted gross income) for 2023 is below $153,000 if single or $228,000 if married filing jointly (for 2024 below $161,000 if single or $240,000 if married filing jointly).
How much may be contributed?
Traditional IRA: Individuals under age 50 may contribute 100% of taxable compensation up to $7,000 for 2024. Individuals age 50 or older may contribute 100% taxable compensation up to $8,000 for 2024.
Roth IRA: The amounts are the same as the traditional IRA for 2024, except an individual’s Roth IRA contribution limit is phased out based on the individual’s tax-filing status and MAGI (modified adjusted gross income).
What is the contribution deadline?
Traditional IRA: The deadline is the same as the individual’s federal income tax-filing deadline, not including extensions. The tax filing deadline is April 15th.
Roth IRA: The deadline is the same as the individual’s federal income tax-filing deadline, not including extensions. The tax filing deadline is April 15th.
Are contributions tax deductible?
Traditional IRA: This account is fully federal income-tax-deductible if the individual (and spouse, if married) is not an active participant in an employer-maintained retirement plan. Otherwise, deduction is based on the individual’s MAGI and tax-filing status.
Roth IRA: Roth IRAs are never federal income tax-deductible.
Are distributions taxable?
Traditional IRA: Generally, they are fully taxable, except the portion that represents basis (after-tax funds), if any.
Roth IRA: Generally, they are tax-free, except the earnings portion of a nonqualified distribution.
Are distributions subject to IRS 10% early distribution penalty?
Traditional IRA: The taxable portion is subject to the IRS 10% early distribution penalty, unless the individual is age 59½ or older or an exception applies.
Roth IRA: The taxable portion is subject to the IRS 10% early distribution penalty, unless the individual is age 59½ or older or an exception applies. Conversion funds that are distributed within five years are also subject to the IRA 10% early distribution penalty, unless the individual is age 59 ½ or older or an exception to the penalty applies.
When must distributions begin?
Traditional IRA: Distributions must begin by April 1 of the year following the owner's age 73 year (Age 72 if date of birth is 07/01/1949 - 12/31/1950, age 70½ if date of birth 06/30/1949 or earlier).
Roth IRA: Distributions are not required during the owner’s lifetime.
When are Traditional IRA deposits accepted?
Deposits for the current year are accepted at any time. Deposits for the prior year will only be accepted until April 15 or the tax filing deadline of the current year. Rollovers and transfers are also eligible for deposits.
Why are IRAs insured separately from non-retirement funds?
Retirement accounts are insured separately from other deposits (such as a checking account) at the same institution because an IRA is held in a different right or capacity (e.g. trust or custodial account).
What if I need access to my money now?
A helpful feature of the Roth IRA is that, for non-qualified distributions, original contribution amounts are returned first. Contributions (as opposed to earnings) are not subject to taxation or the 10% IRS premature distribution penalty when distributed. In other words, you can always get back your principal tax-free and IRS penalty-free for any reason.
When is the contribution deadline for funding a Roth IRA?
Roth IRAs for the taxable year can be opened and funded anytime in between January 1 and the date your tax return is due for the year, excluding extensions. This is normally April 15 of the following year.
What is the MAGI limit for Roth IRA contributions?
Cost-of-living adjustments will apply to the MAGI limits for making regular or spousal Roth IRA contributions [IR-2023-203; Notice 2023-75]
Comparison table of MAGI Limit for Roth IRA Contributions
Full Contribution if MAGI is:
Limited contribution if MAGI is:
No Contribution if MAGI is at or above:
Single, 2023
$138,000
$138,000-$153,000
$153,000
Single, 2024
$146,000
$146,000-$161,000
$161,000
Married Filing Jointly, 2023
$218,000
$218,000-$228,000
$228,000
Married Filing Jointly, 2024
$230,000
$230,000-$240,000
$240,000
Married Filing Separately, 2023/2024
$0 or less
$0-$10,000
$10,000 or more
How do I open a Roth IRA?
Simply see one of our representatives. We will explain the nature of these accounts in more detail and help you complete the simple forms necessary to establish your Roth IRA.
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