Individual Retirement Accounts (IRAs)

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Traditional IRAs

Traditional IRAs are one way to save for your retirement.

Contributions

Contributions you make into a Traditional IRA may be fully or partially deductible, depending on your modified adjusted gross income. There is an annual contribution limit.

Tax Information

Generally, funds in a Traditional IRA are not taxed until they are distributed, which means your earnings grow tax deferred. Distributions from a Traditional IRA are included in your income for the year in which you withdraw the funds.

You should always consider talking with a competent tax advisor prior to opening a retirement account.

Roth IRAs

Roth IRAs are another way to save for your retirement.

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Contributions

Although contributions into a Roth IRA are not tax deductible, distributions are generally tax-free. The amount you are eligible to contribute is dependent on your modified adjusted gross income. There is an annual contribution limit.

Tax Information

You should always consider talking with a competent tax advisor prior to opening a retirement account.

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Coverdell Education Savings Accounts

A Coverdell education savings account (ESA) can be used to make annual nondeductible contributions on behalf of a child until the child reaches age 18. The earnings generated will remain tax deferred while in the ESA. When the child uses the money in the ESA to pay for qualified education expenses, the contributions and the earnings come out tax free.

Contributions

Anyone can contribute to a child's ESA, as long as the contributor's modified adjusted gross income falls below or within the income limits for the year. Those who are eligible to contribute may give to more than one ESA on behalf of multiple children, not to exceed the annual contribution limit of $2,000 per child.

Tax Information

Any one child may not receive more than $2,000 total per year in ESA contributions. If a child withdraws more from his / her ESA than the amount of qualified education expenses for the year, the portion of the distribution beyond the education expenses is taxable. If a child does not use the ESA assets or does not transfer or roll over the ESA assets to an eligible family member by the time he / she reaches age 30, the ESA is deemed distributed, and much be included in gross income for the year and pay a penalty tax on the earnings.

For More Information

Please call (618) 283-9860 to speak with our Trust Department personnel. The Trust Department is located at the The FNB Community Bank Financial Center, 311 Banker Blvd., Vandalia, IL 62471.