HOME INTERNET BANKING » SERVICES » INFO » LOCATIONS CONTACT US PRIVACY POLICY Individual Retirement Accounts The New and Improved IRA's - What America is Saving For Individual Retirement Accounts mean much more than retirement savings. They mean unprecedented tax-free options, more flexibility in making withdrawals, and more freedom to deduct your contributions. The end result is faster, easier, and smarter saving. IRA's Provide: - Tax-free options - Penalty-free withdrawals for educational expenses - Faster retirement earnings - More flexibility to deduct contributions Contact us for more information about Individual Retirement Accounts. How the New IRA's Compare with Other Savings Accounts Account type Tax-deferred earnings Earnings withdrawn tax free Tax-deductible contributions Roth IRA Yes Yes* No CESA IRA Yes Yes* No Deductible IRA Yes No Yes Nondeductible IRA Yes No No Savings account No No No Insurance annuity Yes No No * For qualified withdrawals IRA Frequently Asked Questions (FAQ's) General IRA's | Roth IRA's | Coverdell Education IRA's General IRA FAQ's Am I Eligible to Have a Traditional IRA? What Is Compensation? How Much Can I Contribute to My IRA? Do I Pay Taxes on the Earnings of My IRA? Do I Get a Tax Deduction for My Contribution? Basic Rules for Determining IRA Deductibility? What if I'm Not Eligible for a Deductible IRA Contribution? How Are the Assets Taxed at Distribution? When Can I Withdraw Assets From My IRA Without Incurring Any Penalties? What Happens to My IRA in the Event of My Death? What Is a Spousal IRA? How Do I Move Assets From One IRA to Another? How Do I Move Assets From an Employer-Sponsored Retirement Plan (ERP) to a Traditional IRA? Is there a Contribution Deadline for Funding an IRA? Are There Other Tax Advantages to Establishing an IRA? How Do I Open an IRA? 1. Am I Eligible to Have a Traditional IRA? If you are younger than age 70½ for the entire tax year, and have compensation, you are eligible to establish and make an annual tax-year contribution to a traditional IRA, even if you already participate in certain government plans, a tax-sheltered annuity, a simplified employee pension (SEP) plan, a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), or a qualified pension or profit sharing plan established by an employer. 2. What Is Compensation? Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your net income for personal services performed for the business. All taxable alimony is considered compensation. Interest, dividends, and most rental income are passive income sources and are not considered compensation. 3. How Much Can I Contribute to My IRA? You may contribute any amount up to 100 percent of your compensation or the amount set forth in the chart below, whichever is less, to a traditional IRA (or aggregated between a traditional and a Roth IRA). Additionally, if you have attained age 50 or older by the end of your taxable year, you are eligible to make catch-up contributions. CONTRIBUTION LIMITS Tax Year Contribution Limit Catch-Up Limit Total Limit for Age 50 and Over 2013 $5,500 $1,000 $6,500 2014 $5,500 $1,000 $6,500 4. Do I Pay Taxes on the Earnings of My IRA? All earnings on your IRA contributions (deductible and/or nondeductible) remain tax deferred until you make withdrawals from the account. 5. Do I Get a Tax Deduction for My Contribution? Deductibility of your contribution is based on whether or not you and/or your spouse, if married, are an active participant in an employer-sponsored retirement plan. If you are an active participant, the deductible amount is dependent on modified adjusted gross income (MAGI) and income tax-filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction. Your tax or legal professional can help you determine your actual deduction. 6. Basic Rules for Determining IRA Deductibility If you are single and are not an active participant in an employer-sponsored retirement plan, or are married and neither you nor your spouse are active participants, you are eligible for a full deduction no matter how large your income. If both you and your spouse are active participants, if you are single and an active participant, or if you are not an active participant but your spouse is, you may be eligible for either a full or partial deduction depending on your MAGI. See your tax or legal professional for assistance in determining IRA deductibility. 7. What if I'm Not Eligible for a Deductible IRA Contribution? You can still make nondeductible contributions to your IRA. You may also be eligible for a Roth IRA. 8. How Are the Assets Taxed at Distribution? You must include the taxable portion of the amount withdrawn as income on your tax return. If you are younger than age 59½, and do not meet one of the exceptions, you must also pay a 10 percent penalty tax for early distribution. The portion of a distribution attributable to nondeductable contributions or rollovers of after-tax assets is not taxable when withdrawn, nor is it subject to the 10 percent early-distribuition penalty tax. If certain requirements are met, you may take a once-in-a-lifetime tax-free IRA distribution to fund your Health Savings Account (HSA) tax-year contribution. We recommend consulting your tax or legal professional to make sure this qualified HSA funding distribution is the right financial decision for you. 9. When Can I Withdraw Assets From My IRA Without Incurring Any IRS Penalties? You can withdraw assets from your IRA without a 10 percent early-distribution penalty tax any time after you reach age 59½. You can also avoid the early-distribution tax before age 59½ if you become disabled, if the distributions are a part of certain periodic payments, for medical expenses in excess of 10 percent of your adjusted gross income, for health insurance premiums if you have been receiving unemployment compensation for at least 12 weeks, for distributions paid directly to the IRS due to IRS levy, for qualified reservist distributions, for eligible higher education expenses, or for a first-time home purchase. When you reach age 70½, you must begin to take required minimum distributions or severe tax penalties will apply. 10. What Happens to My IRA in the Event of My Death? Your named beneficiary(ies) will receive the entire proceeds of the IRA. Your beneficiary(ies) will not be subject to the 10 percent early-distribution penalty tax. Distributions to your beneficiary(ies) will be made in accordance with the required minimum distribution rules and your IRA agreement. 11. What Is a Spousal IRA? A married individual can take advantage of a unique IRA contribution rule if he/she has little or no compensation, allowing him/her to make a regular IRA contribution. A married couple must meet two conditions for one spouse to take advantage of the spousal rules. First, the married couple must file a joint federal income tax return. Second, the compensation of the individual benefiting from the spousal rules must be less than the compensation of his/her spouse. A married couple can contribute up to 100 percent of their combined compensation or the contribution limit, whichever is less. The amounts can be divided in any manner between the two spouses' IRAs with no more than the annual limit being contributed to either spouse's IRA. Catch-up contributions are available for eligible spouses and would increase the allowable contribution limits. 12. How Do I Move Assets From One IRA to Another? There are two methods you can use to move assets from one IRA to another: rollover and transfer. For a rollover, you have 60 calendar days following the date of receipt to roll over the distribution to another IRA. Rollovers from IRAs may not occur more than once during a 12-month period (this rule applies to each separate IRA you own). A transfer occurs when the assets are moved from one IRA to another without you having control or custody of the assets. There are no time or frequency limits of the numbers of transfers permitted. 13. How Do I Move Assets From an Employer-Sponsored Retirement Plan (ERP) to a Traditional IRA? An eligible rollover distribution from one of these plans may be rolled over or directly rolled over to an IRA. Generally, an eligible rollover distribution is any distribution except one that is (1) one of a series of substantially equal periodic payments over your single life expectancy or joint life expectancy of you and your beneficiary or for a specified period of ten years or more, (2) a required minimum distribution for an employee age 70½ or older, of (3) any hardship distribution. A rollover occurs when assets distributed from your ERP are paid directly to you, then subsequently rolled over by you to a Traditional IRA within 60 calendar days. A direct rollover occurs when assets distributed from your ERP are made payable to the IRA custodian/trustee for the benefit of your traditional IRA. Taxable ERP distributions paid to you that are eligible for rollover are subject to a mandatory 20 percent federal income tax withholding at the time of distribution. Assets moved to an IRA via a direct rollover are not subject to withholding. As with an IRA-to-IRA rollover, an ERP plan recipient has 60 calendar days following the date of receipt to roll over any portion of the distribution to an IRA. The 12-month limitation does not apply to rollovers from an ERP to an IRA. 14. Is There a Contribution Deadline for Funding an IRA? IRAs for a taxable year can be opened and/or funded any time between the first day of a tax year and the date a tax return is due for that year, excluding extensions. For most taxpayers, this due date is April 15 of the following year. The deadline may be extended in some situations. Examples include a federally declared disaster, a terroristic or military action, or service in a combat zone. 15. Are There Other Tax Advantages to Establishing an IRA? A unique saver's tax credit is available for certain taxpayers who contribute to an IRA and/or an employer's salary deferral plan. See your tax or legal professional for more information. 16. How Do I Open an IRA? See any of our IRA representatives. We can help explain the nature of these accounts in more detail and help you complete the forms necessary to establish your IRA. Please contact us if you have questions or wish to establish an IRA. Note: The information provided in the above Q & A section is intended to provide general information on federal tax laws governing Roth IRA's. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to your individual circumstance. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 90, Individual Retirement Arrangelments (IRAs), and the IRS's web site, www.irs.gov, may also provide helpful information. General IRA's | Roth IRA's | Coverdell Education IRA's Roth IRA FAQ's What Is a Roth IRA? Am I Eligible for a Roth IRA? How Much Can I Contribute Each Year? When Is the Contribution Deadline for Funding a Roth IRA? What assets Can I Move to a Roth IRA? What if I Need Access to My Money Now? Do I Pay Taxes on My Earnings? What Is a Qualified Distribution? Does the 10 Percent Early-Distribution Penalty Tax Apply if I Withdraw My Money? When Do I Have to Start Taking Distributions From My Roth IRA? What Happens in the Event of My Death? How Do I Open a Roth IRA? 1. What is a Roth IRA? The Roth IRA is an individual retirement account where regular contributions are not tax deductible, but distributions of these contributions are tax free. Under certain conditions, the earnings on Roth IRA contributions are also tax free when distributed. The term "tax free" means free from federal income taxes. 2. Am I Eligible for a Roth IRA? There are two requirements for eligibility to make regular contributions to a Roth IRA: you must have compensation (or your spouse must have compensation) and your modified adjusted gross income (MAGI) for any tax year cannot exceed certain prescribed limits (see table below). These limits are subject to annual cost-of-living adjustments (COLAs), if any. 2013 MAGI LIMITS Modified AGI (MAGI) Single Married, Filing Jointly Married, Filing Separately* Less than $10,000 Full Contribution Full Contribution Phaseout $10,000 to $112,000 Full Contribution Full Contribution No Contribution $112,001 to $126,999 Phaseout Full Contribution No Contribution $127,000 to $178,000 No Contribution Full Contribution No Contribution $178,001 to $187,999 No Contribution Phaseout No Contribution $188,000 or Over No Contribution No Contribution No Contribution *If you are married, filing separately, and lived apart from your spouse the entire year, you can use the MAGI limit for a single filer to determine your contribution limit. 2014 MAGI LIMITS Modified AGI (MAGI) Single Married, Filing Jointly Married, Filing Separately* Less than $10,000 Full Contribution Full Contribution Phaseout $10,000 to $113,999 Full Contribution Full Contribution No Contribution $114,000 to $128,999 Phaseout Full Contribution No Contribution $129,000 to $180,999 No Contribution Full Contribution No Contribution $181,000 to $190,999 No Contribution Phaseout No Contribution $191,000 or Over No Contribution No Contribution No Contribution *If you are married, filing separately, and lived apart from your spouse the entire year, you can use the MAGI limit for a single filer to determine your contribution limit. 3. How Much Can I Contribute Each Year? You may contribute any amount up to the lesser of 100 percent of your compensation or the amount set forth in the chart that follows, whichever is less, aggregated between a traditional and a Roth IRA. Additionally, if you have attained age 50 or older by the end of your taxable year, you are eligible to make catch-up contributions. CONTRIBUTION LIMITS Tax Year Contribution Limit Catch-Up Limit Total Limit for Age 50 and Over 2013 $5,500 $1,000 $6,500 2014 $5,500 $1,000 $6,500 *Subject to annual cost-of-living adjustments (COLA), if any. 4. When Is the Contribution Deadline for Funding a Roth IRA? For a given taxable year, you can open and fund a Roth IRA any time between January 1 and the date your tax return is due for the year, excluding extensions. For most taxpayers, this is April 15 of the following year. The deadline may be extended in some situations. Examples include a federally declared disaster, a terroristic or military action, or service in a combat zone. 5. What Assets Can I Move to a Roth IRA? Traditional IRA - Traditional IRA assets may be converted to a Roth IRA. The distribution is subject to income tax, but is not subject to the 10 percent early-distribution penalty tax. Employer Plan - Eligible assets from an employer plan may be rolled over or directly rolled over to a Roth IRA. The taxable portion of the amount rolled over is subject to income tax. 6. What if I Need Access to My Money Now? A helpful feature of the Roth IRA is that, for distributions, regular contribution amounts are returned first without tax or penalty. Converted assets and rollovers from employer plans are returned next. Earnings are returned last. 7. Do I Pay Taxes on My Earnings? No, provided you take the earnings as part of a qualified distribution. That's the best part of the Roth IRA. Unlike a traditional IRA, you cannot take a tax deduction for any of the contributions that you make to a Roth IRA. However, when you're ready to make a withdrawal, you pay no taxes on any of the earnings that your contributions have generated. 8. What Is a Qualified Distribution? In order for earnings to be tax free, you must first meet a five-year holding period for your Roth IRA. This period begins with the tax year for which your first contribution is made. After that, any earnings you withdraw for a qualified distribution reason are income tax free and penalty tax free. Qualified distributions include: 9. Does the 10 Percent Early-Distribution Penalty Tax Apply if I Withdraw My Money? Distributions of earnings not taken as a qualified distribution, or for one of the reasons listed below, are subject to both taxes and 10 percent early-distribution penalty tax. Distributions of assets converted from an IRA or assets rolled over from an employer plan that are not taken as a qualified distribution, after the five-year holding period, or for one of the reasons listed below, are subject to the 10 percent early-distribution penalty tax. 10. When do I Have to Start Taking Distributions From My Roth IRA? You never have to take distributions from your Roth IRA. That's another benefit of the Roth IRA over the traditional IRA. Assets held in a Roth IRA are not subject to age 70½ required minimum distributions. 11. What Happens in the Event of My Death? Your named beneficiary(ies) will recieve the rights to the balance in your Roth IRA. Distributions to the beneficiary(ies) will be made in accordance with the required minimum distribution rules and your Roth IRA agreement. 12. How Do I Open a Roth IRA? Simply see any of our IRA representatives. We will explain the nature of these accounts in more detail, and help you complete the forms necessary to establish your Roth IRA. Please contact us if you have questions or wish to establish an IRA. Note: The information provided in the above Q & A section is intended to provide general information on federal tax laws governing Roth IRA's. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to your individual circumstance. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 90, Individual Retirement Arrangelments (IRAs), and the IRS's web site, www.irs.gov, may also provide helpful information. General IRA's | Roth IRA's | Coverdell Education IRA's CESA IRA (Coverdell Education Savings Account) FAQ's What Is a Coverdell Education Savings Account (CESA)? Who Can Contribute to a CESA? How Much Can I Contribute? How Does the Law Define a "Child"? What if I Want to Save for More Than One Child? If I Can't Contribute the Maximum, Can Someone Else Also Contribute? What is the Contribution Deadline? Who Has Control of the Assets? Do I Pay Taxes on Distributions? What Are Qualified Education Expenses? Can I Move Assets From My Traditional or Roth IRA Into a CESA? Are Distributions Required? Can I Use CESA Assets Together With Other Forms of Education Funding? How Do I Open an CESA? 1. What is an Coverdell Education Savings Account (CESA)? The Coverdell Education Savings Account (CESA) is a nondeductible account that features tax-free withdrawals for a very specific purpose—a child's higher education expenses. At first glance, a CESA may look similar to traditional or Roth IRA's. Higher education distributions are also permitted from these accounts, but while qualified higher education distributions from a traditional or Roth IRA are penalty tax free, and Roth IRA distributions may be free from federal income tax, the same distributions from a CESA are penalty free and federal income tax free. Consult your tax or legal professional for further information regarding state or local income taxes. 2. Who Can Contribute to a CESA? You are eligible if your modified adjusted gross income (MAGI) does not exceed certain limits (see tables under (3) below). There are no compensation requirements or age restrictions for contributors. They do not even need to be related to the child they are contributing for. Contributors can also be nonindividuals like corporations or tax-exempt organizations. These entities have no MAGI restrictions. 3. How Much Can I Contribute? The total aggregate contribution into one or more CESA's on behalf of any child is $2,000 a year. As a contributor, your allowable contribution depends on your MAGI. The MAGI limits are: Single Filers MAGI of $95,000 or Less MAGI Between $95,000 and $110,000 MAGI of $110,000 or More Full Contribution Partial Contribution No Contribution Married, Joint Filers MAGI of $190,000 or Less MAGI Between $190,000 and $220,000 MAGI of $220,000 or More Full Contribution Partial Contribution No Contribution 4. How Does the Law Define "Child"? A child is defined as a person who is under the age of 18. A child's eligibility for CESA contributions ends after the date he/she attains the age 18. Children with special needs are not subject to this restriction. 5. What if I Want to Save for More Than One Child? You may contribute your maximum allowable amount into separate CESAs for as many children as desired. 6. If I Can't Contribute the Maximum, Can Someone Else Also Contribute? Yes, there can be more than one contributor, provided the total annual contribution amount per child does not exceed $2,000. 7. What is the Contribution Deadline? The CESA contribution deadline is the contributor's tax-filing due date, not including extensions. 8. Who Has Control of the Assets? Each CESA will have a responsible individual, usually the child's parent or legal guardian. That individual has control of the assets until the child reaches the age of majority, and in some cases, even after that date. 9. Do I Pay Taxes on Distributions? No and neither does the child provided the assets are used for qualified education expenses. Although you cannot deduct any of the contributions that you make, taxes do not apply to the earnings portion when the assets are withdrawn for education expenses. The earnings portion of distributions for any other purpose is subject to taxes and a 10 percent penalty tax. Distributions due to death, disability, or amounts included in income because of the receipt of certain educational assistance or scholarship avoid the 10 percent penalty tax. 10. What are Qualified Education Expenses? Expenses and corresponding distributions must occur during the same year. If distributions exceed qualified expenses, the additional amount withdrawn is subject to tax and penalty. 11. Can I Move Assets From My Traditional or Roth IRA Into an CESA? Unfortunately, no. You can, however, roll assets over from one CESA into a second CESA established for the same child. You can also roll CESA assets into a CESA for a different designated beneficiary if he/she is a member of the same family (as defined by the law). That way, if a child decides not to pursue his or her education, the responsible individual can roll over the CESA assets to the CESA of a relative who does. 12. Are Distributions Required? The balance must be withdrawn within 30 days after the designated beneficiary's death or his/her 30th birthday, whichever is earlier. The age 30 distribution requirement does not apply to special needs individuals. 13. Can I Use CESA Assets Together With Other Forms of Education Funding? Yes. The rules now allow CESA contributions even if there are same-year Qualified Tuition Program contributions for the same individual. As long as distributions and tax credits are for different expenses, parents can use the Hope Scholarship and Lifetime Learning tax credits in the same year as tax-free CESA disitributions. 14. How Do I Open a CESA? See any of our IRA representatives. We will explain the nature of these accounts in more detail and help you complete the forms necessary to establish a CESA for a child. Please contact us if you have questions or wish to establish an IRA. Note: The information provided in the above Q & A section is intended to provide general information concerning CESA's. It is not intended to provide tax or legal advice or to be a detailed explanation of the rules or how such rules may apply to your individual circumstance. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 970, Tax Benefits for Higher Education, and the IRS' website, www.irs.gov, may also provide helpful information. Designated Roth Account - Assets in a designated Roth account that are part of an Internal Revenue Code Section 401(a), 403(b), or governmental 457(b) plan may be rolled over or directly rolled over to a Roth IRA and are not subject to income tax. Distributions made on or after the date on which you attain age 59½ Distributions made to your beneficiary (or your estate) upon your death Distributions attributable to your being disabled Qualified first-time home buyer distributions (up to $10,000). Substantially equal periodic payments. Qualified reservist distributions Eligible medical expenses in excess of 10 percent of your adjusted gross income (AGI). Health insurance premiums for eligible unemployed individuals. Qualified higher education expenses. Distributions taken within the first five years for any of these reasons: age 59 1/2, death, disability, or first-time home purchase. Distributions paid directly to the IRS due to IRS levy Higher Education - Tuition, fees, books, supplies, and equipment required for the enrollment or attendance at an eligible higher education institution are qualified expenses. An eligible higher education institution is an area vocational school, college, or university. This includes virtually all accredited public, nonprofit, and proprietary post-secondary institutions. An educational institution should be able to tell you if it is an eligible institution. Elementary and Secondary Education - This includes kindergarten through grade 12 at a public, private, or religious school as determined under state law. Like higher education, tuition, fees, books supplies, equipment, and room and board are qualified expenses. Unique to elementary and secondary expenses are uniforms, transportation, and computer technology, equipment, or Internet access and related services if used during any of the designated beneficiary's school years. (This does not include expenses for software designed for sports, games, or hobbies unless the software is predominately educational in nature. Room and Board - Generally the school's posted room and board charge, or the allowance for room and board for federal financial aid purposes for students living in private housing - but not at home - are eligible expenses if the student is enrolled at least half time Qualified Tuition Program Contributions - Contributions made to a qualified tuition program (also known as Section 529 plans) from CESA assets are also qualified expenses. NetTeller Banking is now available for your smartphone for users of the iPhone and Android operating systems. There is no charge for using this feature but you do have to be signed up for our NetTeller Online Banking service. You will be able to view your account balances, make transfers and use Bill Pay*. All the features of NetTeller are accessible now on your phone, at your convenience wherever you are. 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