Questions and Answers About Our IRA Products
What is a ROTH IRA?
- A ROTH IRA is a nondeductible IRA which features tax-free withdrawals for certain distribution reasons after a five-year holding period.
Why is this better than a traditional IRA?
- The money you withdraw is tax-free and penalty-free. With a regular IRA you have to claim a distribution as income.
There are no mandatory distribution requirements (like age 70 ½).
You can take qualified distributions tax free and penalty free (after only five years).
What are some of the tax free withdrawals?
- First time home buyer (certain restrictions may apply).
Attainment of age 59 ½.
Disabled.
Death (money goes to the beneficiary).
When can I take the money out?
- After a five-year period.
Distributions before then will be subject to taxes and penalties on the earnings withdrawn.
How much do I need to deposit to open one?
- We require a minimum deposit of $500.00.
Can I deduct this on my taxes?
- No. ROTH IRAs are non-deductible.
What is a traditional IRA?
- A deductible IRA where earnings accrue tax-free. However, withdrawals are subject to taxes.
What are the benefits over a ROTH IRA?
- The contributions you make to a traditional IRA are tax deductible (if you meet certain requirements).
Do I pay taxes on the earnings of my IRA?
- All earnings remain deferred until you make withdrawals from your account. When money is withdrawn, you must claim it as income.
Can I make withdrawals from my traditional IRA?
- Yes, but a 10% IRS penalty tax may be imposed if the withdrawal is made prior to age
59 ½.
Do I have to begin taking my traditional IRA money out?
- Yes, at age 70 ½. You must begin withdrawing your traditional IRA funds.
What are the rates and terms?
- Rates and terms are the same as our regular Bank of Essex IRA accounts. You must deposit $500.00 to oopen an IRA certificate. (Roth IRAs are offered in one-year terms only.) See our rates for more information.
How can I get an IRA?
- Any of our customer service associates will be glad to set one up for you.
