- 1. What is an IRA?
- 2. What kinds of IRAs does First National Bank offer?
- 3. How much can I contribute to an IRA?
- 4. In what types of assets may I invest?
- 5. Are there any minimums?
- 6. What are the rates on First National Bank's IRA CDs and money market accounts?
- 7. Are there any fees involved with getting a First National Bank IRA?
- 8. How do I transfer my IRA account from my current custodian?
- 9. How do I take a distribution?
- 10. What is a mandatory distribution?
- 11. How often are distributions allowed?
- 12. What is the tax consequence of taking a distribution?
- 13. What are the tax consequences of an "early" withdrawal?
- 14. How do I make subsequent contributions to my First National Bank IRA?
- 15. What type of IRA is bet for me?
This is a way for you to pay for your retirement. Plus, the earnings of the account grow tax-deferred (Traditional IRA) or tax-free (Roth IRA) until withdrawn.
2. What kinds of IRAs does First National Bank offer?
We offer both a Traditional IRA product and the Roth IRA product. Contributions to a Traditional IRA may be deductible; earnings are tax-deferred and withdrawals are taxable at retirement. The Roth IRA does not allow deductible contributions, but earnings are tax-free and if held for five years or more, making withdrawals at retirement is tax-free.
3. How much can I contribute to an IRA?
You can contribute up to the lesser of $4,000 or 100% of your annual earnings. A non-working spouse may also contribute up to $3,000, if your joint income equals or exceeds the amount you both contribute. Additional "catch-up" contributions are available to those over 50 years of age.
4. In what types of assets may I invest?
You may invest in First National Bank’s CDs.
The minimum contribution for a First National Bank IRA is $1000. Contributions of $1,000 or more can be invested in a First National Bank CD. We offer CDs terms of 3 months, 6 months, 12 months, 18 months, 24 months, 30 months, 36 months, and 48 months.
6. What are the rates on First National Bank's IRA CDs and money market accounts?
The rates on First National Bank's IRA CDs are the same rates as our standard CDs.
7. Are there any fees involved with getting a First National Bank IRA?
A penalty fee may be imposed for early withdrawals on IRA CDs. Early withdrawal penalties on Certificates of Deposit will be waived on individual distributions taken by an investor after age 59½.
8. How do I transfer my IRA account from my current custodian?
Just ask our First National Bank customer service representative for an application. Upon completing the application, we will forward the form to your current IRA custodian to initiate the transfer of funds.
9. How do I take a distribution?
Just simply ask a First National Bank customer representative to complete a distribution form. Once we've received have completed the form, we will then liquidate your assets as required and transfer the monies to your First National Bank Checking account or provide you with a check. If you are not eligible to take a distribution you may incur tax consequences. Additionally, if you take a distribution on a CD account outside of the grace period and you're under the age of 59½, you'll incur an early withdrawal penalty.
10. What is a mandatory distribution?
In a Traditional IRA, you are required by law to begin taking distributions from your IRA in the year you reach age 70½. The amount of the distribution is based on your age and the value of your account. Internal Revenue Service Publication 590 provides the information to calculate the minimum distribution.
11. How often are distributions allowed?
Distributions are made monthly. However, you can take a distribution less frequently.
12. What is the tax consequence of taking a distribution?
Distributions from a Traditional IRA are treated as income to you. You will receive an IRS form 1099R each January summarizing the amount distributed and the taxes withheld, if any. In a Roth IRA, if you take a distribution after the account has been open five years, the distribution will not be included in your income. If taken within the 5-year period, it will be taxable, like a Traditional IRA distribution.
13. What are the tax consequences of an "early" withdrawal?
An early withdrawal is generally one taken before age 59½ in a Traditional IRA or within the first five years of a Roth IRA. In addition to the amount added to your income, the IRS may assess an additional 10% penalty. You should consult with your tax advisor regarding the tax consequences.
14. How do I make subsequent contributions to my First National Bank IRA?
Just ask a customer representative for a contribution form. We will then deposit the funds to your IRA account and purchase the asset you designate. Please note that First National Bank does not limit contribution amounts but depending on your personal situation the federal government may limit these amounts. To ensure you have not exceeded your contribution limits we recommend that you consult a tax advisor.
15. What type of IRA is bet for me?
We recommend that you talk to your financial/tax advisor to determine whether a Traditional or Roth IRA is best for you. If you have a pension plan where you're employed, your contributions will generally not be deductible, making the Roth IRA more advantageous, since the distributions are tax-free. If you do not have a pension plan, you may find the deductibility of contributions in the Traditional IRA more advantageous. Again, check with your financial/tax advisor for specific recommendations.
