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IRA Frequently Asked Questions

Funding an Individual Retirement Account is one of the easiest ways to save money for those golden years of retirement. And if the need arises for money for college or a first home, an IRA may be a good source for those extra dollars. There is an IRA that is suitable for almost everyone.

What do we do for your IRA?

Our services include:

  • Trustee services
  • IRS approved prototype documents
  • IRS Forms 5498 and 1099-R
  • Notice of required minimum distributions and free calculation on request
  • Toll-free number for customer service

Which IRA Is Best For You?

Below you will find an introduction to the various Individual Retirement Accounts we service. For more information about IRAs, please view our IRA Services pages

Traditional IRA

A Contributory or Traditional IRA is a personal retirement plan designed to give working individuals a way to contribute to their own retirement accounts.

Anyone under 70½ with earned income can make contributions. Earnings grow tax-deferred until you take them out. In addition, you may be able to deduct all or part of your contributions, depending on your income level and coverage by an employer sponsored plan. Also, an additional contribution can be made to a separate IRA for a married couple with a wage earning spouse and a non-wage earning spouse. Due to recent tax law changes, contribution limits are as follows:

Year Amount
2013 $5,500

Each year, your contribution can be made to the same account. You may also open and fund multiple accounts; however, the total contribution to all accounts cannot exceed the annual allowable limit.

Additional contributions, called "catch up" contributions, may be made by individuals age 50 and older:

Year Amount
2013 $1,000

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Rollover IRAs

Rollover IRAs may be the answer for people who receive a lump sum distribution from an employer sponsored plan (such as a 401(k) or a 403(b) program) and want to continue the tax-deferred growth of their retirement funds.

There is no restriction on the amount of the rollover, but the rollover must be completed within 60 days after receiving assets from the qualified plan.

For distributions from qualified plans, 20% must be withheld from distributions made directly to employees. However, this can be avoided by having the money sent directly from the plan to an IRA or another employer plan.

A rollover IRA can also be a conduit between employer-sponsored plans as long as no other monies are added to the account. If you receive a distribution from a 401(k) plan and roll it to an IRA, you may subsequently roll that account into a new employer's 401(k) plan.

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Roth IRA

In 1998, the Roth IRA became the newest member of the IRA family. Anyone with earned income whose adjusted gross income is within the limits may make an after-tax contribution. The best part is that qualified withdrawals are federal income tax free! This means that if $20,000 is contributed to the account and it increases in value to $80,000, you will have $60,000 in tax-free earnings at distribution. Anyone with earned income, regardless of participation in an employer sponsored plan, who falls within the Adjusted Gross Income (AGI) limits may contribute to a Roth IRA.

Roth IRAs also allow people who are over age 70½ to contribute, and there are no required distributions until the account holder dies.

Contribution limits are the same as those for a Traditional IRA.

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Simplified Employee Pension Plan (SEP)

Self-employed individuals and small companies who want an easy and economical plan should consider a SEP IRA. These plans combine many of the benefits of an IRA and a profit sharing plan. Every year, an employer can make a fully vested, deductible contribution of up to 25% of participating payroll. The annual contribution limit to an employee's account is the lesser of 25% of compensation or the annual deferral limit.

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An employer with fewer than 100 employees may choose a program funded by employee pre-tax salary deferrals and employer contributions. SIMPLE IRAs offer the advantages of an employee funded 401(k) program with the contributions deposited to a self-directed IRA. Employees may defer up to the lesser of 100% of compensation or the annual deferral limit. Additional "catch up" contributions may be made by individuals over age 50.

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