INDIVIDUAL RETIREMENT ACCOUNTS (IRA)

Traditional or Roth or are available for your retirement savings needs. To make saving for your retirement easier, you can arrange for a weekly deposit direct from your paycheck in an amount that you can afford, and then when you accumulate enough ($250), deposit the funds in any one of our IRA Share Certificates.

The Coverdell Education Savings Account, formerly known as an Education IRA, is more attractive than ever as a means to save for your children's education.

Compare IRA Options:
Question Roth IRA Traditional IRA Coverdell ESA
Who can contribute? You are eligible if you earn compensation and your MAGI1 is less than the defined limits set by Congress. If your MAGI is too high to contribute the annual contribution limit, you may be able to make a smaller contribution. Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation).

Anyone who has received a distribution from a qualified retirement plan and decides to move the proceeds of the plan into an IRA.		 You are eligible if your MAGI is less than the limit is less than the limits set by Congress. If your income is too high to contribute the annual contribution limit, you may be able to make a smaller contribution. Check with a tax professional for current figures.

Contributions not allowed after the beneficiary reaches age 18 (except for special needs beneficiaries).
Question Roth IRA Traditional IRA Coverdell ESA
How much can I contribute? You may be able to contribute up to:
  • $5,000 
For owners age 50 and older, you may be able to contribute up to:
  • $6,000 
Contributions can not exceed compensation. 		You may be able to contribute up to:
  • $5,000 
For owners age 50 and older, you may be able to contribute up to:
  • $6,000 
Contributions can not exceed compensation. 		You may be able to contribute up to:
  • $2,000 per child each year
  • Limit applies to all Coverdell Education Savings Accounts (ESA) for the same child
Question Roth IRA Traditional IRA Coverdell ESA
Who can make deductible contributions? No one can deduct contributions Deductible up to annual contribution limit:
  • Single individuals not active in employer retirement plans
  • Single individuals active in qualified retirement plans with MAGI below defined limits
  • Married couples with neither spouse active in an employer retirement plan
  • Married individuals active in qualified retirement plans filing joint tax returns with MAGI below defined limits
  • Married individuals not active in qualified retirement plans filing joint tax returns with spouses who are, as long as MAGI is below defined limits
No one can deduct contributions
Question Roth IRA Traditional IRA Coverdell ESA
What are the tax advantages? Your Tax Advantage:
  • Earnings are tax-deferred and withdrawals are tax-free if the account is open for five tax years and withdrawals are for a qualified reason (age 59 1/2, disability, death, or a first-time home purchase2
  • Not required t start withdrawals at age 70 1/2
Your Tax Advantage:
  • Earnings grow tax-deferred until withdrawn
  • Contributions may be tax-deductible
Your Tax Advantage:
  • Withdrawals for qualified education expenses are tax-free
  • Qualified education expenses include tuition, fees, books, computer equipment and technology required for elementary, secondary and post-secondary education
  • A beneficiary may receive tax-free distributions from a Coverdell ESA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits
Question Roth IRA Traditional IRA Coverdell ESA
When can I withdraw without restrictions? Withdrawal Options:
  • Regular contributions can be withdrawn tax-free and penalty-free at any time
  • After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons: age 59 1/2, disability, death or a first-time home purchase2
Withdraw penalty-free for any of the following reasons:
  • Qualified higher-education expenses
  • First-time home purchase2
  • Age 59 1/2
  • Disability
  • Qualifying medical expenses exceeding 7.5% of gross income
  • Payment to beneficiaries upon the owner's death
  • Payment of health insurance premiums while unemployed for 12 weeks or longer
Withdrawal Options:
  • Withdrawals are tax-free and penalty-free only for qualified education expenses (earnings are subject to tax and penalty for most other withdrawals)
  • Funds can be transferred from one child's account to an account for another child in the family

Not intended as tax advice. Please consult a tax professional.

1 MAGI - Modified Adjusted Gross Income. Contributions and deductibility limits change frequently. Consult your tax professional regarding your individual circumstances.

2 Lifetime limit for exemption on first-time home purchase is $10,000.

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