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Retirement Plans

Choose an IRA Plan

The most common Individual Retirement Account (IRA) plans are Traditional, Roth and Simplified Employee Pension (SEP). Elsewhere Bank also offers a Coverdell Education Savings Account. You may have more than one IRA plan to choose from, depending on your age and taxable income.

Traditional IRA

Eligibility Individuals under 70½ who have received compensation, including a nonworking spouse under the age of 70½.
Distribution of Assets Withdrawals made before 59½ may be subjected to an additional 10% penalty tax.
Mandatory Distributions Distributions must start by 70½.

Roth IRA

Eligibility Individuals of any age who receives compensation with adjusted gross income below $110,000 (single) or $160,000 (joint). This includes a nonworking spouse.
Distribution of Assets Similar to traditional IRA provisions, but withdrawals of investment earnings are tax-free if an account has been open for at least five years, and the owner is at least 59½ or the withdrawal is used for a first-time home purchase or used upon death or disability.
Mandatory Distributions No requirements to begin distribution at 70½.

Coverdell Education Savings Account

Eligibility Individuals of any age with adjusted gross income below $110,000 (single) or $220,000 (joint) can contribute on behalf of any child under 18.
Distribution of Assets Must withdraw for qualified higher-education expenses.
Mandatory Distributions Account must be liquidated or rolled over to a member of the immediate family before the child reaches 30.

Simplified Employee Pension (SEP) IRA Savings

Eligibility Business of any size can set up a SEP plan, including:

  • Sole proprietorships, including a self-employed individual
  • Partnerships
  • Corporations
  • Tax-exempt entities, such as nonprofits

Requirements to receive SEP IRA contributions:

  • Are age 21 or older
  • Have worked for the employer during any three of the preceding five years
  • Earn at least $550
Distribution of Assets Withdrawals made before 59½ may be subjected to an additional 10% penalty.
Mandatory Distributions Distributions must start by 70½.

Contribution Limits for Traditional and Roth IRAs

Tax Year Standard Limit 50+ “Catch-up” Total $ limit for 50+
2002-2004 $3,000 $500 $3,500
2005 $4,000 $500 $4,500
2006-2007 $4,000 $1,000 $5,000
2008 $5,000 $1,000 $6,000
2009 and after $5,000 + $500 cost of living adjustment = $5,500 $1,000 $6,000 + $500 cost of living adjustment = $6,500

Important information about IRA accounts

Fees

No opening fee. Annual administration fee is $15 per year, per plan. Please refer to the Bank’s Service Fees Schedule and Consumer Checking & Savings Accounts Brochure for more information regarding required balances and applicable fees for these accounts. Maximum annual contribution as defined by IRS guidelines.

Early Withdrawal Penalties

A penalty may be imposed for withdrawals before maturity:

  • If your account has an original maturity of 7–30 days: the fee we may impose is all interest earned or that could have been earned during the term.
  • If your account has an original maturity of 31–90 days: the fee we may impose will equal one months interest earned or that could have been earned on the amount withdrawn subject to penalty.
  • If your account has an original maturity of 91–365 days: the fee we may impose will equal three months interest earned or that could have been earned on the amount withdrawn subject to penalty.
  • If your account has an original maturity of 366 days or more: the fee we may impose will equal six months interest earned or that could have been earned on the amount withdrawn subject to penalty.
Waiver of early withdrawal penalty

In certain circumstances such as the death or incompetence of an owner of this account, the law permits, or in some cases requires, the waiver of the early withdrawal penalty. See your plan disclosure if the account is part of an IRA or other tax qualified plan.

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