Personal Individual Retirement Account (IRA) Plans
What's the difference between a Traditional IRA and a Roth IRA?
Traditional IRA - This type of Individual Retirement Account allows you to defer taxes on the earnings on your
contributions until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which you make
them. You are eligible to establish a Traditional IRA if you are younger than age 70 1/2 for the entire tax year and you
or your spouse have compensation.
Roth IRA - The Roth IRA allows only nondeductible contributions and features tax-free withdrawals for certain
distribution reasons after a five-year holding period. Since Roth IRA contributions are nondeductible and taxed in the
year they are earned, if you expect to be in a higher tax bracket when you retire, you may benefit more from a Roth IRA
than a traditional IRA. You are eligible to establish a Roth IRA if you or your spouse have compensation and your modified
adjusted gross income (MAGI) does not exceed certain prescribed limits.
Wisconsin Governor James Doyle signed the 2009 Act 161 aligning the State of Wisconsin with current Federal Laws regarding
Roth IRA conversions on March 15, 2010. Many who were not eligible for Roth conversions can now convert a traditional IRA
to a Roth IRA, without early distribution or excess distribution penalties. CBB does offer Roth IRAs utilizing a Certificate
of Deposit for your investment choice. Call us to review your term and rate options.
Learn more about Roth IRA's.
Health Savings Account (HSA) - A Health Savings Account (HSA) is a tax-exempt trust or custodial account established
exclusively for the purpose of paying or reimbursing qualified medical expenses of you, your spouse, and your dependents. You
are eligible for a regular HSA contribution if, with respect to any month, you:
* Are covered under a high-deductible health plan (HDHP) on the first day of such month;
* Are not also covered by any other health plan that is not an HDHP (with certain exceptions for plans providing
preventative care and limited types of permitted insurance and permitted coverage);
* Are not enrolled in Medicare; and
* Cannot be claimed as a dependent on another individual's tax return.
If you are eligible, you can establish an HSA in much the same way you would establish an IRA, with a qualified trustee or
custodian. Each year, you are responsible for determining your allowable annual HSA contribution and
whether you have qualified
medical expenses eligible for reimbursement with nontaxable HSA distributions.
Because IRA's grow tax deferred, in most cases, if you have to cash them in early, there are penalties that you should be
aware of. Learn more about
10% Withholding vs. 10% "Penalty" on IRA Distributions.
Community Business Bank offers a wide array of Individual Retirement Accounts
(IRAs) options. To assist you with your IRA
investment bank options, and questions, please call a CBB Personal Banker, Sauk City
(608.643.6300) or Lodi (608.592.7788).
Note: Community Business Bank is not engaged in rendering tax,
investment or legal advice. If tax,
investment or legal
advice is required, please seek the services of your qualified professional advisor.
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