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FirstBank Traditional IRA

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What is it?

An Individual Retirement Account (IRA) is a savings plan that allows you to defer taxes on the interest you earn until retirement age. In many cases, the money you contribute is tax–deductible.

Open your Traditional IRA at any FirstBank location.   

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Who is eligible for a Traditional IRA?

Anyone with earned income may open or add to a Traditional IRA up to age 70½. There is no minimum age requirement as long as the IRA contribution comes from earned income.

What is a Spousal IRA?

A Spousal IRA is designed to allow a married person to make an IRA contribution for their spouse who may not have earned income. A married couple can contribute up to 100% of their combined income or $11,000, whichever is less. No more than $5,500 can be contributed to each individual’s IRA.

How much can be contributed to a Traditional IRA?

You may contribute 100% of your earned income up to $5,500 per year (less any Roth IRA contributions).

What amount is tax–deductible?

The amount that is tax–deductible varies depending on marital status, income, and whether you have a retirement plan at work. Please review the guidelines in this brochure or consult your tax advisor to determine how much of your IRA contribution is tax–deductible.

When may funds be withdrawn?

You may withdraw funds when you reach 59½ years of age. Because withdrawals are taxed as ordinary income, some people prefer the tax advantage of taking withdrawals in installments. However, you may withdraw the entire amount in one lump sum.

When must funds be withdrawn?

The year in which you turn 70½, you must begin to take required minimum distributions (RMDs) or tax penalties will be imposed.

Are there penalties for early withdrawals?

If you withdraw funds before age 59½, there is a 10% early distribution penalty unless you qualify for an exemption. Exemptions are allowed for disability, qualified medical expenses, qualified education expenses, qualified first time home purchase, qualified health insurance expenses, or death. The bank may impose an early withdrawal penalty depending on the type of account.

 

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