Individual Retirement Accounts

Individual Retirement Accounts are available for individuals to set aside funds for retirement and take advantage of tax deferred or tax free interest income. You will want to consult with your tax advisor for details, but in the meantime, Bank of Walterboro can get you headed in the right direction.

Features:

Penalties:

Early withdrawal will result in forfeiture of three month’s interest. No forfeiture of interest for IRA holders 59 1/2 and older.

With the current law, the maximum contribution to a traditional IRA is $5,500 for tax year 2013 and 2014. An additional $1000 contribution can be made by qualified individuals over the age of 50. In addition, you will receive a full tax deduction for your contribution if you and your spouse are not covered by an employer sponsored retirement plan. If you or your spouse are participants in an employer sponsored retirement plan, your income and filing status will determine the amount of your deductible contribution.

The following table shows the effect of the modified adjusted gross income (MAGI) thresholds for active participants on deductibility. These thresholds are subject to cost-of-living adjustments (COLAs).

Traditional IRA Deductibility MAGI Thresholds
Filing Status
Tax Year
Full Deduction
Partial Deduction
No Deduction
Single
2013
≤ $59,000
Between $59,000 and $69,000
≥ $69,000
2014
≤ $60,000
Between $60,000 and $70,000
≥ $70,000
Married, Joint
2013
≤ $95,000
Between $95,000 and $115,000
≥ $115,000
2014
≤ $96,000
Between $96,000 and $116,000
≥ $116,000
Married, Joint (not active participant but spouse is)
2013
≤ $178,000
Between $178,000and $188,000
≥ $188,000
2014
≤ $181,000
Between $181,000and $191,000
≥ $191,000
Married, Separate
2013
N/A
<$10,000
≥ $10,000
2014
N/A
<$10,000
≥ $10,000

See IRS Publication 590 for more information.

Important note:

The 10% penalty for early withdrawals does not apply to distributions of up to $10,000 for first time home buyer expenses or to distributions used for qualified educational expenses.

ROTH IRA

With the new Roth IRA, your withdrawals can be completely tax-free - but you cannot deduct your annual contributions.
It is always best to consult your tax advisor for details relevant to your specific needs. However, here are a few basic rules that govern Roth IRA's:

You can contribute to a Roth IRA if:

  1. You have earned income (or your spouse has earned income) AND
  2. Your modified adjusted gross income (MAGI) cannot exceed certain limits (see below)
Roth IRA Eligibility MAGI Thresholds
Filing Status
Tax Year
Full Deduction
Partial Deduction
No Deduction
Single
2013
≤ $112,000
Between $112,000 and $127,000
≥ $127,000
2014
≤ $114,000
Between $114,000 and $129,000
≥ $129,000
Married, Joint
2013
≤ $178,000
Between $178,000 and $188,000
≥ $188,000
2014
≤ $181,000
Between $181,000 and $191,000
≥ $191,000
Married, Separate
2013
N/A
<$10,000
≥ $10,000
2014
N/A
<$10,000
≥ $10,000

See IRS Publication 590 for more information.



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