Individual Retirement Account (IRAs)
IRAs are a great way to save for your future. That’s why First Mid makes it simple to open and manage IRAs. Below we’ve highlighted a variety of IRA options for you to choose from to help you get started and on your way to saving for the future!
Traditional IRAs allow you to defer taxes on your contribution earnings until they are withdrawn. You are eligible to establish a Traditional IRA if you are under the age of 70.5 for the entire tax year and either you or your spouse has earned income. There are limitations on how much you can contribute to a Traditional IRA; however, if you are age 50 and older, you can choose to make additional catch-up contributions. All earnings on your contributions will remain tax-deferred until you make withdrawals from the account. They are then taxed as income in the year they are withdrawn.
Roth IRAs allow only nondeductible contributions. Withdrawals on your out-of-pocket contributions are always tax-free. However, withdrawals on your earnings are only penalty and tax-free after a five-year holding period and attaining age 59.5. You are eligible to contribute to a Roth IRA if you or your spouse has earned income and if your modified adjusted gross income (MAGI) has not exceeded certain limits. A Roth IRA allows you to continue making contributions after age 70.5.
Variable Rate IRAs
A variable rate IRA earns a variable rate of interest, and there is no set maturity date. Interest earned may be tax-deferred or free, based on the type of IRA.
Certificate of Deposit/Individual Retirement Accounts
Choose from a variety of interest rates and terms with our Certificate of Deposit/IRAs! All accounts require a minimum opening deposit of $500 with terms ranging from 12 months to 60 months. A penalty may be imposed for early withdrawals.
IRA Account Management
In addition to offering you a variety of options, we also help you manage your IRA accounts. Some actions you might consider should you manage your own IRA include:
You have the option to recharacterize and treat your Traditional IRA as a Roth IRA. To do this however, your modified adjusted gross income must be below $100,000. Check with your tax advisor prior to recharacterization for possible tax implications.
Required Minimum Distributions (RMD)
On April 1st (after you reach 70.5), you are free to withdraw any amount desired, but you must withdraw at least a minimum amount calculated by dividing the adjusted account balance by the applicable life expectancy factor. If you do not withdraw the required amount, an IRS penalty tax of 50% will be assessed on the amount not withdrawn. This applies to Traditional IRAs only.
Rollovers and Transfers
Sometimes moving around your IRA funds can help you better manage your retirement plans. With a rollover, IRA funds are paid directly to you for redeposit into another IRA within 60 calendar days of payment. In a transfer, your funds are moved directly from one IRA to another without you ever having to touch them. When making a rollover or transfer, the IRA that your funds are being moved into must be the same type of IRA that your funds are moved out of, such as Traditional to Traditional.
Start saving for you future today! For more information, contact a First Mid customer service representative.