Taking Care of Tomorrow
Peoples State Bank offers two options for individual retirement accounts (IRAs): Roth IRAs and Traditional IRAs. Your annual contribution may be tax deductible. Contributions that are not fully deductible are still eligible to receive tax-deferred earnings.
IRAs are a non-employer-sponsored account you can use to save for retirement. An IRA can be a simple money market savings account or certificate of deposit — or it can be an investment account that you use to purchase stocks, bonds and mutual funds.
Unlike a 401(k), you don’t have to wait for your employer to offer the account to open and contribute to an IRA. Most investment advisors can set up an account for you to help meet your retirement planning needs, and many even offer automatic transfer options to make saving even easier. IRA accounts often offer a wider range of options to help meet your growth requirements and risk tolerance.
Peoples State Bank offers Traditional IRAs, Roth IRAs, Coverdell IRAs, Simple IRAs and Health Savings Accounts. Your annual contribution may be tax deductible. Contributions that are not fully deductible are still eligible to receive tax-deferred earnings. You may make a deposit at any time, in any amount, to your account. There is no service charge.
What’s the Difference between a Roth and Traditional IRA?
Traditional IRAs are funded with pre-tax dollars, which can lower your annual income and can then potentially lower your tax liability. Retirees are usually taxed on the money in these accounts when a withdrawal is made. If you’re under the minimum age for withdrawals, be prepared to pay a tax penalty.
Roth IRAs are comprised of deposits made with post-tax dollars. These deposits are not deducted from your annual income, so you’re paying taxes on this money up front. However, any withdrawals made from the account (including principal and money earned) are tax-free if considered a qualified distribution. Please consult with a tax professional regarding your individual situation.
There are limits on who can contribute to a Roth account: if you’re making more than $139,000 as a single filer for the 2020 tax year, you’re not eligible to contribute. Make sure you talk to a licensed tax professional about your contribution limits or if you’re filing as a married couple.
All rates quoted as Annual Percentage Yield (APY) and subject to change without notice.
Effective Date: November 5, 2020
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