Why open an IRA?
IRAs help you save for retirement while enjoying tax advantages. There are two types of IRAs:
- A Traditional IRA allows you to benefit from possible tax-deductible contributions and earnings that grow tax deferred. This is usually the best choice for someone who expects to be in a lower tax bracket after retirement.
- A Roth IRA allows you to invest toward your retirement with tax-free earnings, with potential tax-free withdrawals in retirement. This is usually the best choice for someone who expects to be in the same or a higher tax bracket in retirement. The table below compares the features of each one, based on what may be most important to you.
| What's most important to you: | Traditional IRA | Roth IRA |
|---|---|---|
| Getting a tax deduction on my contribution (if certain conditions are met) | Yes | No |
| Tax-free withdrawals on my savings during retirement (if certain conditions are met) | No | Yes |
| Tax-deferred growth on my savings | Yes | Yes |
| Penalty-free access to my annual contributions before retirement | No | Yes |
| The ability to avoid required minimum distributions (RMDs) after age 73* | No | Yes |
| The ability to contribute to an IRA in addition to my retirement plan at work | Yes | Yes |
| The ability to contribute after age 73* (if certain conditions are met) | Yes | Yes |
| The ability to rollover my pre-tax 401(k) plan without paying taxes | Yes | No |
| The ability to get tax-deferred growth on my savings because my income is too high to make a Roth IRA contribution | Yes | No |
* In 2033, the age at which RMDs must be taken is scheduled to increase to 75.
IRA CDs
There are several investment choices for retirement savings, including IRA CDs.
| Account Type | Opening Balance | Rate Type | Additional Deposits Allowed Anytime | Early Withdrawal Penalty |
|---|---|---|---|---|
| 6 Month | $100 | Fixed | Yes, up to annual limit set by the IRS | 3 Months' Interest |
| 1 Year | $100 | Fixed | Yes, up to annual limit set by the IRS | 3 Months' Interest |
| 2 Year | $100 | Fixed | Yes, up to annual limit set by the IRS | 12 Months' Interest |
| 3 Year | $100 | Fixed | Yes, up to annual limit set by the IRS | 12 Months' Interest |
| 4 Year | $100 | Fixed | Yes, up to annual limit set by the IRS | 12 Months' Interest |
- No set up or annual maintenance fees
- Additional deposits allowed at any time (up to the annual limit set by the IRS)
- Penalties apply for withdrawals if the IRA CD has not reached maturity
- Transfer fee applies when money is transferred to another financial institution (waived in the case of death and when money is transferred to Citizens Investment Services)
- On the day of maturity, the IRA CD automatically renews for another term at the rate in effect at that time
- The IRS defines eligibility, contribution, and distribution rules. Please consult our Certified Financial Planner or your tax advisor to see which IRA is right for you.
Additional Retirement Savings options are available through Citizens Investment Services.