INDIVIDUAL RETIREMENT ACCOUNTS (IRA's)

With all that's going on in your daily life, it's easy to forget about the future. Whether your retirement is 5, 10, 25 years away, or your planning to purchase your dream house - let us help you plan for that special day. Put your future first, with a Citizens Bank & Trust IRA.

Traditional IRA

Still a favorite choice for retirement planning and rollover!

Traditional IRA contributions (up to $2,000 per year) are generally tax deductible, creating the opportunity for you to save for your future and today by saving on taxes that you might otherwise pay. Plus your earnings grow tax deferred.

New rules on Traditional IRA's allow more individuals to deduct IRA contributions even if they participate in a retirement plan at work. For the 2000 tax year, the deduction does not start to phase out until adjusted gross income (AGI) exceeds:

• $31,000 for single filers and
• $51,000 for married couples filing jointly

The threshold will continue to increase gradually until they reach:

• $50,000 for single filers and
• $80,000 for joint filers in 2007.

Another rule allows most spouses who do not participate in a company retirement plan to deduct up to their full Traditional IRA contributions - even if their plan-participant spouses cannot. Under the new rule, the non-participant spouse's deductions phase out if joint AGI is between $150,000 and $160,000.

Roth IRA

The new IRA that's not just for retirement!

The Roth IRA can help first-time home buyers save for a down payment. Contributions to a Roth IRA are not tax deductible, but withdrawals are generally tax-free, if:

•
 You don't begin withdrawals until at least five years after you establish the IRA, and
•
 You are at least age 59 *, or use the funds for a first-home purchase (withdrawal for this purpose are limited to a lifetime cap of $10,000).*

The maximum annual contribution to an IRA is:

•
 $2,000 or 100% of earned income, whichever is less;
•
 reduced dollar-for dollar by contributions made to a Traditional IRA for the same tax year and;
•
 phased out for singles with adjusted gross income (AGI) of more than $95,000 and married couples filling jointly with AGI more than $150,000.

 

*Withdrawals made prior to age 59* may be subject to a 10% IRS early withdrawal penalty in addition to ordinary income taxes. The IRS 10% penalty does not apply if the equal periodic payments are taken over life expectancy for at least five years or upon attainment of age 59 *, whichever is later, if the withdrawal is used for a first-time home purchase (lifetime of $10,000 per individual), qualified higher education expenses, certain medical expenses and certain other uses, or in the event of disability or death. For Further information on tax deductions, consult your tax accountant.

 

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