Individual Retirement Account
Traditional IRAs
We offer a variety of retirement plans to help you build for a comfortable future. Deposit Rates We have the following terms:
- 18 months Fixed
- 18 months Variable
- 30 months Fixed
- 60 months Fixed
Traditional IRAs are available as a retirement savings vehicle for those who have earned income. Maximum contributions change from year to year. Please call 607-865-4126 or your local office of NBDC for the current figure. Minimum deposit for fixed-rate IRAs is $500.00. Our variable IRA requirement is $100. The interest you earn on your IRA isn't taxable until you withdraw the funds, and if you qualify, your contributions will be tax deductible.
Depositors must start taking minimum distributions from their account when they reach 70½ years of age, but the funds will be available to them from age 59½ on. Distributions are considered income for the effective year, and must be declared on income tax forms, frequently at a lower, post-retirement tax rate. Interest is compounded quarterly and paid to the CD. Fixed rates are subject to change the first of every month and the variable rate changes every quarter. The fixed rate change applies only to new or renewing IRAs, while the variable rate change will have immediate effect on current and new Variable IRAs. We automatically roll over our IRAs at maturity at the current rate of interest and term and give you 10 calendar days to change the term. Unlike most institutions, we do not charge any hidden costs or maintenance fees.
Roth IRAs
These IRAs differ a bit from the traditional IRA, in that there are no age limitations on making contributions. They are limited to individuals with modified adjusted gross income of $110,000 or less, and for couples, $160,000 or less. Deposit Rates
Roths are not tax deductible, but still earn interest on a tax-deferred basis. If you qualify, you may be eligible for a tax credit of up to 50 percent of your contributions that do not exceed $2,000. See a tax advisor for pertinent information. In addition, if you do not withdraw any earnings from your Roth IRA for at least five years, and satisfy a qualifying event, the tax-deferred earnings become tax free. These events include that the depositor has attained 59½ years of age; has died; suffers from a disability; or is making a first home purchase. There are no required minimum distributions at 70 ½ years of age.
Simple IRAs
These IRAs are meant for small businesses that wish to set up self-funded retirement plans for their employees. Simple stands for “Savings incentive match plan for employees of small employers.” These accounts are available to for-profit and non-profit employers who have no more than 100 employees. They may not be used in conjunction with any other qualified retirement plan. Limitations on contributions change from year to year. Please call 607-865-4126 for the current limits. Employers have the option of matching deferred payroll contributions by up to 3 percent or 2% of the contribution itself. Employees who contribute via deferred salary reduce their taxable income by the amount of the contributions; employers receive a tax deduction for their matches; and all plan earnings are tax deductible. Deposit Rates
An employer may place restrictions on which employees are eligible for participation, but they cannot be excluded if they have earned $5,000 or more from the employers in two prior years; or can be expected to earn $5,000 in the current year.
Call your local office of NBDC for further information or contact your tax advisor for input.