Certificate of Deposits and Individual Retirement Accounts
Traditional CD and IRA’s
- Available in 1 month to 60 months, except IRA’s which available only from 12 months to 60 months
- Minimum Deposit of $2,500.00 for terms under a year to open
- Minimum Deposit of $500.00 for terms over a year to open
- Interest is compounded and paid quarterly, except for terms of 3 months or less are paid at end of term
- Subject to early withdrawal penalties
If you are under age 70 ½ for the entire tax year and have earned income, you are eligible to establish a Traditional IRA. To open a Roth IRA, there is no age restriction and eligibility is based on having earned income and your modified adjusted gross income cannot exceed certain limits. You may deposit any amount up to 100% of your earned income or $5,000, whichever is less.
If you are age 50 or above, you may deposit catch-up contributions of up to $1,000 in addition to the $5,000.
Earnings on IRA contributions remain tax deferred until withdrawals are made.
Deductibility of your IRA deposit for tax purposes is based on whether or not you are an active participant in an employer maintained retirement plan and, if so, your adjusted gross income tax filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction.
Funds can be withdrawn from your IRA without the 10% IRS premature distribution penalty anytime after you reach 59 1/2, become disabled, or when the distributions are part of certain periodic payments.
At age 70 ½ , you must begin to take minimum required distributions from your Traditional IRA or severe penalties will be imposed. There are no minimum required distributions from Roth IRAs.
If you have earned income and your spouse has less than you or no earned income, you can establish a Spousal IRA. The combined contribution limit for both spouses is the lesser of 100 percent of combined earned income or twice the maximum allowable amount which is $5,000. To qualify for a spousal IRA, you must be married at the end of the year and file a joint federal income tax return.
IRAs for the taxable year can be opened anytime between January 1 and the date your tax return is due for the year, excluding extensions, normally April 15 of the following year.
IRA investments may be in certificates of deposit.
Tax Deductibility: Please consult your advisor regarding deductibility of your IRA deposits for tax purposes.