What is an IRA?
An IRA is an Individual Retirement Account. If you're asking yourself "what is an IRA?" then it's important to know the difference between the types of IRAs available.
Geddes Federal Savings & Loan Association offers both traditional IRAs as well as a Roth IRA option. Both a traditional IRA and a Roth IRA have different conditions that determine eligibility, so it's important to know the difference to know which retirement savings account is best for your personal situation.
Learn more about traditional IRAs and Roth IRAs below.
What is a traditional IRA (Individual Retirement Account)?
A traditional IRA is a special tax-deferred savings account authorized by the Internal Revenue Code section 408. It is a unique and simple way to encourage people to save money for retirement.
What are the tax benefits realized from a traditional IRA?
Generally for 2015 and 2016, you may add up to $5,500/$6,500 of earned income to your traditional IRA each year and have it be either fully or partially tax deductible. If your contribution is tax deductible, then you receive two tax benefits: 1) an immediate tax savings, because you will pay fewer taxes because of the deduction and 2) the earning generated by the traditional IRA are not taxed until distributed. If your contribution is not tax deductible, you still receive the tax benefit of tax deferral on the traditional IRA’s earnings. You may also qualify for a tax credit.
View Our Savings & Deposit Rates page for current IRA Rates
What is a Roth IRA?
A Roth IRA is a special savings plan authorized by the Federal government to help you accumulate funds for your retirement. Roth IRA contributions are made with after-tax dollars. Contributions are non-deductible but all withdrawals, including earnings are tax free if the account has been open for five years and the account holder is 59 ½ or older.
Who is eligible to contribute to a Roth IRA?
Every individual who has earned income or received alimony may contribute to a Roth IRA. Income from other sources such as investments or inheritances do not qualify. For 2015/2016, if you are single, your adjusted gross income cannot exceed $116,000. If you are married and file a joint return, your adjusted gross income cannot exceed $183,000.
View Our Savings & Deposit Rates page for current Roth IRA Rates
Coverdell Education Savings Account:
What is a Coverdell Education Savings Account?
A Coverdell Education Savings Account is a type of tax-preferred savings and investment account authorized by the Internal Revenue Code Section 530 to encourage taxpayers to save for future education expenses. The annual contribution limit is $2,000.00.
Who can establish a Coverdell Education Savings Account?
Grandparents and parents generally are the individuals who establish Coverdell Education Savings Account’s. However, there is no legal requirement that a person must be a relative of the person for whom they wish to establish this type of account. There are normally four parties involved in a Coverdell Education Savings Account:
- A financial institution acting as custodian
- A depositor
- A responsible individual
- A designated beneficiary
The income earned by or within Coverdell Education Savings Accounts will not be taxable when distributed, if funds withdrawn are to pay qualified education expenses for qualified elementary, secondary or post-secondary education expenses.
Open a Roth IRA or Traditional IRA Near Syracuse, NY
**Stop in today, ask for one of our IRA Specialists they would be happy to assist you. Alternatively, contact us online here.**