CDs & IRAs

Individual Retirement Account (IRA)

Traditional IRAs

  • Interest is tax deferred until you withdraw it
  • Contribution may be fully or partially deductible depending on your income level and participation in an employee-sponsored retirement plan
  • You can contribute if you are under age 70½ for the entire year and have earned income
  • Funds may be withdrawn without penalty after you reach 59½ or sooner for other reasons (disability, excessive medical expenses, higher education, first time home purchase) within certain limitations
  • Funds must start to be distributed after reaching age 70½ years

Roth IRAs

  • Nondeductible from your taxes
  • Tax-free withdrawals once you fulfill certain criteria
  • You can still contribute even beyond the age of 70½ years
  • You may contribute $6,000 or $7,000 for year 2021 (depending on your age) or up to 100% of your income whichever is less, as long as your Modified Adjusted Gross Income (MAGI) is within the limits
  • After holding the Roth IRA for a five-year period, upon reaching age 59½ you may begin to take distributions from your Roth IRA and you will not pay any federal taxes on any of the contributions or earnings
  • Plus, with a Roth IRA, there is no mandatory age to begin making withdrawals

If you are under 50 years of age at the end of 2021: The maximum contribution that you can make to a traditional or Roth IRA is the smaller of $6,000 ($7,000 if you're age 50 or older) or the amount of your taxable compensation for 2021. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000 (7,000 if you're age 50 or older). The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

Coverdell Education Savings Account

  • Previously called the Education IRA
  • Designed to help parents, grandparents, aunts or uncles save for a family member's or loved one's higher education
  • Contributions are not tax deductible
  • Earnings are tax-free
  • Funds must be to pay for primary, secondary or college education expenses for a designated person
  • Contributions can be as much as $2,000 per year, per designated beneficiary (child)
  • Designated beneficiary must be under the age of 18
  • Any balance must be distributed within 30 days after the date the beneficiary reaches age 30
  • No age limit requirement for special needs adults

Certificate of Deposit (CD)

  • Variety of terms from 7 days to 5 years
  • Open CD Statement Account
  • Minimum opening deposit is $500
  • There is a substantial penalty for early withdrawal from a CD