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Individual Retirement Accounts (IRAs)

Traditional IRAs

Many Americans save through IRA's because, like you, they want to enjoy a comfortable retirement. A comfortable retirement begins with sound financial planning, and that's exactly what an IRA represents - part of a sound financial planning package. IRA's offer you a number of advantages.

  1. Security - By contributing to an IRA, you are taking an important step toward a secure financial future.
  2. Tax-Deferred Earnings - All IRA earnings are tax-deferred. This means your IRA earnings are not taxed until you take withdrawals from your IRA.
  3. Tax Deductions - You may be eligible to deduct all or part of your IRA contributions.
  4. Flexibility - Each year you decide whether you want to contribute to your IRA. You are never required to make IRA contributions.
  5. Accessibility - Unlike some retirement plans which only allow distributions at certain times, your IRA funds are always yours. You may withdraw them whenever you wish (penalty may apply).

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Roth IRAs

A retirement fund where you invest your after-tax dollars today, let the investment grow tax-deferred, and withdraw your principal and earnings tax-free after 5 years. (You may be subject to a 10% penalty on the earnings if taken before age 59 1/2).

When Can I Use My IRA Assets?

If you satisfy two conditions, you may make tax-free and penalty-free withdrawals from your Roth IRA. First, the plan must have been open for a minimum of five years. Second, the withdrawal must be made after the occurrence of one of the following events:

  • Age 59 1/2
  • Death
  • Disability
  • First home purchase

Distributions, which meet the above requirements, are referred to as "qualifying distributions." While you may take distributions from your Roth IRA at any time, distributions which are not qualifying distributions will be subject to taxes (and in some cases early distributions penalties) to the extent they exceed your aggregate contributions to Roth IRA's.

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