IRA (Individual Retirement Account)
Opening an Individual Retirement Account (IRA) at Community 1st can provide financial security during your retirement - and may save you tax dollars today. With all of our IRA accounts there are:
- No handling fees
- No service charges
Roth IRA
Who can contribute?
- You are eligible if you earn compensation and your MAGI* is less than the defined limits set by Congress. If your MAGI is too high to contribute the annual contribution limit, you may be able to make a smaller contribution.
How much can I contribute?
- $5,000
- For owners, age 50 and older, your annual contribution limit is $6,000.
- Cannot exceed compensation
What are the tax advantages?
- Earnings are tax-deferred and withdrawals are tax-free if the account is open for five tax years and withdrawals are for a qualified reason (age 59 ½, disability, death, or a first-time home purchase**)
- Not required to start withdrawals at age 70 ½
Traditional IRA
Who can contribute?
- Anyone under age 70 ½ who has income from compensation (or who is filing jointly with a spouse who earns compensation)
- Anyone who has received a distribution from a qualified retirement plan and decides to move the proceeds of the plan into an IRA.
How much can I contribute?
- $5,000
- For owners age 50 and older, your annual contribution limit is $6,000.
- Cannot exceed compensation
What are the tax advantages?
- Earnings grow tax-deferred until withdrawn
- Contributions may be tax-deductible
Coverdell Education Savings Accounts (ESA)
What is a Coverdell Education Savings Account (ESA)?
- Coverdell ESAs were created to help people save for a child’s education expenses, such as tuition, fees, books, supplies, equipment, and in some cases, room and board, and computers.
How does an ESA work?
- With an ESA, you make nondeductible contributions that provide the potential for tax-free withdrawals-including earnings down the road.
Who can contribute?
- Anyone – family member or nonfamily member – can contribute to a child’s ESA, as long as the contributor’s modified adjusted gross income (MAGI) falls below or within the income limits for the year. If your MAGI falls below the lower limit, you may contribute up to the $2,000 maximum per child. If it falls within the limits, you may contribute a portion of the maximum annual contribution. If you income exceeds the limits, you cannot contribute to an ESA for that year.
How much can I contribute?
- Depending on your MAGI, you may be able to contribute up to $2,000 per child.
What is the deadline for making ESA contributions each year?
- You have until the due date for filing your federal income tax return for the year to contribute to an ESA. For most individuals, the deadline date is April 15th.
Not intended as tax advice. Please consult a tax professional. *MAGI – Modified Adjusted Gross Income. Contribution and deductibility limits change frequently. Consult your tax professional regarding your individual circumstances.
**Lifetime limit for exemption on first-time home purchase is $10,000.
