Individual Retirement Accounts, more commonly referred to as IRAs, were established by Congress to help Americans save for retirement. They offer specific tax benefits, depending on their account type, that encourage you to do so.

Traditional IRA

The traditional IRA helps contributors get a tax break now, since the money deposited is deducted from a person’s gross income the year they put it in. When they start making distributions, usually at age 59 ½, they have to pay taxes on it then. Dividends earned are also not taxed until withdrawal. The IRA will eventually be used to supplement a pension and/or Social Security payments.

Roth IRA

Roth IRA contributions are always made with after-tax dollars. The reward for paying taxes on contributions now is that the contributor pays no taxes on qualified distributions later – including all of the dividend earnings.
There are limits on the amount a person can contribute to an IRA each year. They depend on both the calendar year and that person’s income. Both types of IRAs have penalties for withdrawing funds before age 59 ½, unless it’s for a qualified exception, such as the following:
  • Qualified higher-education expenses
  • A qualified first-time home purchase
  • Long-term disability
  • Qualifying medical expenses exceeding 7.5% of your adjusted gross income
  • Payment to beneficiaries upon the owner's death
  • Payment of health insurance premiums while unemployed for 12 weeks or longer
It’s best to consult a tax professional regarding your individual situation, but you can find the answers to common questions on the IRS’s website.
Our IRAs are available as share accounts and share certificates. They earn higher rates than our regular savings accounts.