Enjoy an investment account designed to help you save toward retirement. An Individual Retirement Account (IRA) offers valuable tax benefits for people saving for retirement. When you open a Traditional or a Roth IRA with us, you can invest your funds in a Certificate of Deposit (CD) and choose from a variety of terms and competitive interest rates.
Individual Retirement Account
Save and invest for the future.
If you’re interested in getting an upfront tax deduction, then a Traditional IRA may be a good choice. Traditional IRA contributions are considered “before tax dollars”, which means they may be tax deductible on both state and federal income tax returns for the year in which the contributions are made.
Contributions: can be deductible on state and federal income tax
Age Contribution Limits: No age limit as long as you have earned income.
Withdrawal Taxes: You will pay taxes when you withdraw contributions or earnings.
Early-Withdrawal Penalties 2: If you are under 59 ½ you may have to pay an additional 10% tax. Exceptions apply.
Required Minimum Distributions 3: You must start taking distributions by April 1 following the year in which you turn 72 and by December 31 of later years.
Income and Deduction Limits: You can always contribute the full amount, but your ability to deduct contributions may be reduced or eliminated if you or your spouse has a 401(k) or other retirement plan at work and contributions were made for the year (including employer contributions). No matter your income, your deduction is allowed in full if neither you nor your spouse are covered by a retirement plan at work.
Roth IRA 1
If you’re okay with delaying the tax benefit, then a Roth IRA may be a good choice. Contributions to a Roth IRA are made with “after taxed” income. So, while your contributions are not tax deductible -the earnings and withdrawals are generally tax-free. Typically, you must have earned and reported income in the year contributions are made.
Contributions: are NOT tax deductible
Age Contribution Limits: Any age is eligible, as long as you have earned income and your modified adjusted gross income is below certain amounts.
Withdrawal Taxes: None, if it’s a qualified distribution
Early-Withdrawal Penalties 2: If you are under 59 ½ you may have to pay an additional 10% tax on the earnings withdrawn.
Required Minimum Distributions: None – If you are the original owner.
Income and Deduction Limits: At higher incomes the amount you can contribute is reduced or eliminated.
Annual Contribution Limits
2020 and 2021 Limits
Under 50: $6000
50 or older: $7000
If you contribute to both a Roth and a Traditional IRA, the combined annual limit is $6000 (or $7000 if 50 or older)
1 Southern Bank does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
2 Certain exceptions apply, such as healthcare, purchasing first home, etc. Consult an attorney or tax professional regarding your specific situation.
3 An annual fee of $10 will be assessed when customer reaches Required Minimum Distribution (RMD) age. This fee will be waived if the RMD is distributed electronically by ACH.