IRAs

Retirement Planning 

It’s never too early or too late to start thinking about retirement. Individual Retirement Accounts (IRAs) are a great way to maximize retirement savings and take advantage of tax benefits. At FNBC, we can help you choose the right IRA for you.

Understanding IRA Contributions and Distributions

Contributions:
  • An IRA “contribution” is the money you put into your IRA.
  • Deductible and Non-deductible contributions.
  • You must have earned income in a year to deposit money into your IRA.
Distributions:
  • An IRA “distribution” is the money you take out of the account.
  • The main difference between IRAs is whether the distribution is penalized or not and taxed or not. It all depends on your age and the type of IRA you have.
  • Depending on the type of IRA, there may be tax penalties for withdrawing money before a certain age.

Which IRA is best for me?

At FNBC, we offer two different IRA products: Traditional IRAs and Roth IRAs.
Traditional IRA
An individual retirement account that offers tax deferred earnings and possible tax deductions. You may be able to deduct contributions in whole or in part. All earnings are tax deferred until withdrawn. Please contact your tax advisor for further details.

For example:
  • If you put $500 into a Traditional IRA, all $500 goes into the IRA, while possibly counting as a tax deduction on that year’s taxes.
  • The $500 – and additional money you deposit each year – will grow through interest and other investments in the IRA.
  • When you begin to withdraw money from your IRA, let’s say $1,000, you will be subject to taxes on that amount.
Contributions:
  • Contributions will not be taxed and may be tax-deductible depending on your modified adjusted gross income and other factors.
  • You are not allowed to make any more contributions to your Traditional IRA when you reach age 70½.
  • Each year, you may contribute up to $5,500 (or $6,500 if 50 or older) of earned income.
Distributions:
  • You are required to begin withdrawing from your Traditional IRA at age 70½.
  • The money you withdraw will be subject to taxes.
Roth IRA 
An individual retirement account that offers possible tax FREE earnings as long as the five-year waiting period is satisfied and qualifying distribution rules are met. Please contact your tax advisor for further details.

For example:
  • If you put $500 of after tax money into a Roth IRA, the $500 – and additional money you deposit each year – will grow tax-free through interest in the Roth IRA.
  • When you begin to withdraw money from your IRA, let’s say $1,000, you will pay no taxes on that amount as long as certain qualifications are met.
Contributions:
  • Unlike Traditional IRAs, Roth IRA contributions are made after taxes.
  • Roth IRAs are also different from Traditional IRAs, in that, there is no maximum age to open or contribute to a Roth IRA and contributions may continue after the age of 70 1/2 as long as you have earned income. 
  • Your modified adjusted gross income must be below a certain level in order to make deposits into a Roth IRA.
Distributions:
  • Unlike a Traditional IRA, you are not required to take mandatory distributions at any time during your lifetime.
  • The money you withdraw will not be taxed, if certain qualifications are met.
Rollover IRA 
An individual retirement account that gives you the ability to move your retirement savings from your retirement plan at work (401(k), profit-sharing plan, etc.) into an IRA. Rolling over to an IRA allows you to keep your savings tax-deferred and typically gives you a broader choice of investments. Please contact your tax advisor for further details.

Contributions:
  • Rollover from a Qualified Retirement Plan ONLY.
  • No maximum annual contribution.
  • You are not allowed to make any more contributions to your Rollover IRA when you reach age 70½.
Distributions:
  • Taxes are paid on distributions at the taxable rate upon withdrawal.
  • You are required to begin withdrawing from your Rollover IRA at age 70½.
How do I open an IRA?
At FNBC, there are five ways to open an IRA: you can open a new one, rollover an existing IRA, transfer an existing IRA, rollover from a Qualified Plan, or you can inherit an IRA account. Our FNBC customer service representatives can assist you with the opening process and answer any questions you may have regarding documents for IRA documents.