Traditional IRA

Planning for your future may be one of your biggest concerns.  With a Traditional IRA at 1st Equity Bank, you can make tax deductible contributions that will allow you to build a solid financial future.

Who is eligible to contribute to a Traditional IRA?

Individuals under the age 70 1/2 for the entire tax year  and have earned income are eligible to contribute to a Traditional IRA.

How much can I contribute each year?

In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) which increased the amount of contribution .  In addition, IRA owners who will turn 50 or older this year can make additional contributions call “catch-up” amounts to make up for their lost savings.

Qualified participants are permitted to contribute the following maximum amounts each year, or 100% of your income, whichever is less.

Maximum Contribution Limits for 2021
Individual: $6,000.00  Age 50+: $7,000.00  ($6,000 + $1,000 catch-up contribution)

Are my contributions tax deductible?

You are eligible for a full deductions on your contributions if neither you nor your spouse is an active participant in an employer sponsored retirement plan.  If you are an active participant, your deductible amount depends on your income and tax-filing status.  Consult your tax professional to determine whether your tax contribution is tax deductible.

Are my funds taxed at distribution?

All distributions attributable to deductible contributions are taxable.  If you make withdrawals prior to age 59 1/2, you may be subject to an additional 10% early withdrawal penalty tax.  Your withdrawals may be exempt from this penalty tax if your distribution meets one our the following criteria:

    • it is made due to death or disability,
    • it is made in equal periodic payments,
    • it is used to pay medical expenses in excess of 7.5% of your adjusted gross income,
    • it is used to purchase health insurance for unemployed individuals
    • it is used to pay qualified higher education expenses or it is used for a first-time home purchase.

For additional information on Traditional or Roth IRA’s, come by 1st Equity Bank and speak with a personal banker.