IRA's and Coverdell Education Savings Accounts (CESA's)
Individual Retirement Accounts (IRA's)
If you are looking for a safe place for your retirement money to grow, you can choose from our fixed rate CD's ranging from 3 months to 5 years, an 18-month variable IRA CD and IRA Statement Savings.
Our IRA Representatives at each of our office locations, will show you how each plan could be beneficial to you. The following types of retirement plans are available:
- Traditional IRA - Allows you to defer taxes on earnings until they are withdrawn. If you have earned income and are younger than age 70 ½ though the entire year, this IRA could fit you. You may be eligible to receive a tax deduction for a contribution to this IRA. You may contribute any amount up to 100% of your compensation or $5,000 - whichever is less. You may withdraw after the age of 59 ½ without an IRS penalty.
- Individuals with low income could receive a tax credit for making a contribution.
- Individuals may be allowed to rollover their employer's retirement plan, and IRA assets, between other retirement plans and IRA's, providing that requirements and rules are followed.
- Roth IRA - The primary benefit of this IRA is the possible tax-free earnings distributions. It's available for married couples with modified adjusted gross income of $156,000 or less and singles with a modified adjusted gross income of $99,000 or less. Contributions are not tax deductible. You may contribute up to $5,000 per year between Roth and Traditional IRA's.
- SEP IRA - (Simplified Employee Pension Plan) - This is an employer sponsored retirement plan. Businesses may offer this plan to its employees. The employer could contribute up to 25% to an unlimited number of eligible employees and the employer receives the tax deduction. The employee benefits by having a retirement plan that is growing because of the contributions deposited into it by the employer.
- Contribution limit up to 25%.
- Individual compensation limit of $225,000.
- Maximum per participant contribution limit of $45,000.
- Simple IRA - (Savings Incentive Match Plan for Employees) - This is a retirement plan for small businesses of 100 employees or less. Employees can make salary deferrals that require a (limited matching) employer contribution.
- Coverdell Education Savings Account (CESA)- This account is used specifically for a child's educational expenses. Contributions are not tax deductible but the earnings grow tax free as long as they are withdrawn for qualified educational reasons. Some educational expenses that qualify are tuition, fees, books, supplies and equipment required for the enrollment or attendance of your designated beneficiary. Contributions are limited to $2,000 per year per child and only for children younger than age 18. CESA funds must be used up for qualified education expenses prior to age 30 or additional taxes may be imposed. Any person can contribute to a child's CESA as long as the contributor's income does not exceed certain limits. First Federal offers CD's ranging from 3 months to 5 years and CESA Savings Accounts as the investment type for a CESA.
How do I open an IRA or a CESA?
Whether starting a new IRA plan, a new CESA, or dealing with a direct rollover or transfer, First Federal's experienced IRA representatives will help you through the process. We will explain the different types of IRA and CESA accounts to help you complete the necessary forms to establish your IRA or CESA account..
Important tax information:
Please consult with your tax or legal professional prior to opening or contributing to an IRA or CESA.
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