Plan for your retirement, or your child’s education, now, with an IRA from The Washington Savings Bank.
Individual Retirement Accounts
We offer Quarterly Compounding Certificates of Deposit with a minimum opening balance of $100.00 to be used as investments in your retirement planning. Contact us for information on terms and current Interest Rates.
A Traditional IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. Qualified contributions you make may be fully or partially tax deductible and generally, amounts in your traditional IRA are not taxed until distributed. You must begin taking at least minimum distributions at age 70 1⁄2.
The Roth IRA provides no deduction for contributions, but if you meet certain requirements, all earnings are tax free when you or your beneficiaries withdraw them. Other benefits include avoiding the early distribution penalty on qualified withdrawals, and avoiding the need to take minimum distributions after age 70 1⁄2.
IRS Publication 590 explains the rules of Individual Retirement Accounts. Consult a tax professional to determine which IRA is the best investment for your retirement planning.
Coverdell IRA – Coverdell Educational Savings Account (ESA)
Give the gift of education. With rapidly escalating costs of higher education, a Coverdell Educational Savings Account (ESA) can help. The main benefits of a Coverdell ESA include:
- Unlike state 529 plans, Coverdell ESA’s can be used to pay for qualified elementary and secondary education expenses.
- Earnings grow tax-free if distributions are used for qualified education expenses.
The Taxpayer Relief Act of 1997 created the Education IRA, now known as the Coverdell ESA. Its sole purpose is to help you pay for your child’s education expenses. Distributions are tax-free as long as they are used for qualified education expenses. Qualified expenses include tuition, fees, books, and equipment required for enrollment or attendance at nearly any post-secondary, elementary or secondary educational institution (public, nonprofit or proprietary). Certain room and board expenses also may qualify.
Anybody who meets the income requirements can open and contribute to your child’s Coverdell ESA. This includes grandparents, aunts and uncles, family friends and anyone else who wants to give towards your child’s education fund. Even corporations, tax-exempt organizations and other entities can make Coverdell ESA contributions, and there are no income limits on these contributors. However, the total annual contributions to all Coverdell ESA’s for each child can’t exceed $2,000.
IRS Publication 970 explains more about the Coverdell ESA.