Individual Retirement Accounts

Individual Retirement Accounts (IRAs) can help you plan for retirement and for higher education expenses for your dependents. You may benefit from the tax savings and compound interest earnings of IRAs. Consult a tax advisor about the impact of contributions based on your individual tax circumstance.

Some differences between an IRA and a regular savings account are:

  • An IRA allows you to contribute money into an account that holds earnings, tax-deferred, until you choose to withdraw your money. When you withdraw money from the IRA, you will have to pay taxes based on the tax bracket you are in at the time of withdrawal. In most cases, when you retire and you are over the age of 59½, you will be in a lower tax bracket than when you are working. With a regular savings account, interest earnings are not tax-free.
  • Regular savings accounts can usually be withdrawn from any time. With IRAs, withdrawals are limited and may incur a penalty.
  • IRAs have a set limit of contributions that can be made each year. With a regular savings account, you are able to contribute as much as you can afford each year.
FNCUTRADITIONAL IRA
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ROTH IRA
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EDUCATION IRA /
COVERDELL ESA
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Designed For:People who expect to be in a lower tax bracket once they retirePeople who expect to be in the same or higher tax bracket when they retirePeople who want to help pay for the educational expenses of someone under the age of 18
EligibilityYou must be under the age of 70 ½ and still collecting a paycheckAny age, and still earning a paycheckAnyone can contribute; the beneficiary must be under the age of 18
Tax FeaturesContributions are made with pre-tax dollars; your account grows tax-deferredContributions are made with after-tax dollars; your account grows tax-deferred; if you qualify, withdrawals may be tax free tooYour account grows tax-free; no tax on earnings used for eligible education expenses; may be used to pay for elementary or secondary school
Annual Contribution Limit$5,500
$6,500 if over 50
$5,500
$6,500 if over 50
Up to $2,000,

depending on your

 annual earnings
Other ConsiderationsCan’t make contributions to this account once you are over age 70 ½Can be used for estate planning and offers the benefit of tax-free income to your heirsBeneficiary must use funds by age 30

Account can be transferred to relative
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