Individual retirement accounts (IRAs) are personal retirement savings accounts that offer tax benefits and a range of investment options. Many investors use IRAs as their common source of saving for retirement. An IRA is a type of account established to assist people with planning for their retirement needs. Each IRA has its own characteristics to evaluate when setting your retirement savings goals.
There’s a minimum deposit amount of $100 to open any type of IRA. Farmers State Bank offers competitive rates on IRAs. Please call or stop in and talk to our friendly staff to find out the current rates. Farmers State Bank offers two types of IRA accounts: Roth and Traditional
Roth IRA
- You cannot deduct contributions to a Roth IRA.
- Withdrawals are generally tax-free and penalty free after five years and after age 59½.
- You can make contributions to your Roth IRA after you reach age 70 ½.
- Income eligibility limitations.
- You can leave amounts in your Roth IRA as long as you live.
- The account or annuity must be designated as a Roth IRA when it is set up.
Traditional IRA
- Contributions may be tax deductible.
- Withdrawals of pre-tax contributions and earnings are taxed as current income during retirement.
- No income limitations.
- Contributions you make to a traditional IRA may be fully or partially deductible, depending on your filing status and income.
- Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until you take a distribution (withdrawal) from your IRA.