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You > Financial Planning Strategies

IRA Options

An Individual Retirement Account (IRA) is a tax-deferred retirement account for employed individuals. As an employed individual, you may already contribute to a employer-sponsored retirement plan such as a 401(k) or 403(b), however, experts say that employer-sponsored plans may not provide income sufficient to meet your needs throughout a full retirement. Even if you are contributing to a plan, you can still open an IRA account through Canandaigua National Bank & Trust that provides you with additional retirement planning options. We provide you with the information and tools that you need to make the right choice: 

Comparing a Traditional IRA vs. a ROTH IRA

Key Differences

Traditional IRA

Roth IRA

Age Requirements

Must contribute prior to age 70 1/2  

None

Income Limits

None for non-deductible contributions. Deductible contributions subject to income limits if tax payer is an active participant in an employer-sponsored retirement plan. Must have earned income through employment.

Must have earned modified adjusted gross income below $129,000 for an individual ($127,000 for 2013) or below $191,000 if married filing jointly ($188,000 for 2013).

Tax Advantages

 

Tax-Deferred Contributions and Earnings

Tax-Free Earnings and Withdrawals

Tax Deductible Contributions

Yes No

Required Withdrawal Age

Required Minimum Distributions (RMD) beginning by April 1 of the year after age 70 1/2

No RMD

Withdrawal Penalties

A withdrawal processed after the attainment of age 59 ½ is not subject to any withdrawal penalties. However, withdrawals made prior to age 59 ½ may be subject to a 10% early withdrawal penalty.

An exception to the 10% penalty may apply if taken for one of the following reasons:

  • First-time homebuyer expenses 
  • Paying for higher education expenses 
  • Health insurance premiums following unemployment 
  • Certain medical expenses 
  • Result of disability or death 
  • Substantially equal periodic payments 
  • IRS levy

You are able to take withdrawals from your contributions at any time without penalty. A 10% penalty may apply for withdrawals taken from earnings that are not considered to be “Qualified” (see below).

Qualified Withdrawals

N/A

Withdrawals from a Roth IRA will be considered “Qualified” and Tax Free if taken after satisfying a 5 year waiting period AND one of the following events occurs:

  • Attainment of age 59 1/2 or older
  • Death
  • Disability
  • First-time homebuyer

 

Key Similarities Traditional & ROTH IRA

Maximum Contribution Limits for 2014

 

Individual Account: $5,500 ($5,500 for 2013)

Contribution “Catch Up” Limits for 2014

 

At or after age 50 (by end of the calendar year), you can make additional contributions of up to $1,000

IRAs for Non-Working Spouse

 

A non-working spouse is eligible to contribute to an IRA. Contributions are subject to the limits stated above.

 

Contact Us
If you would like additional information, please use the contact us form or if you would like to speak with a Financial Services Professional, please call 585.419.0670.

 

This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.

Rollover IRA Blue

This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.