Tag Archives: individual retirement accounts

IRA

IRA FAQs: Find Your Answers

Retirement may seem far away or coming soon to you. Either way, you likely have some questions as many people do. Today, we will tackle some of the most common questions. 

What is an IRA?

IRA stands for Individual Retirement Account. The purpose of it is to help people save for retirement through their paychecks. The two types of IRAs are Traditional and Roth. 

Traditional: With a Traditional IRA, you are able to put pre-tax dollars away for retirement, which will later be taxed upon withdrawal.

Roth: With a Roth IRA, you pay taxes each year, but will not pay taxes at withdrawal. 

How much can I contribute?

You may contribute less than 100 percent of your income but no more than $6,000  if you are under the age of 50 or $7,000 if you’re over the age of 50 for tax year 2019 and 2020. 

Can I borrow money from my IRA?

The answer is yes and no. While the IRS does not want you to borrow money from the IRA, you are allowed to take money out and convert it to another retirement account. This must be done within 60 days of withdrawal from the IRA.

Who can have an IRA?

Any person who has earned income can have an IRA. Even if you already have a 401k through your employer, you can still contribute to your own. 

Can I have both a Traditional IRA and a Roth IRA?

Yes, you can have both. However, you are still subject to the same overall contribution limit. It would need to be divided up over the two accounts.

Can I move my assets from my employer-sponsored plan to my IRA?

Yes, you can move your assets in this way. However, you cannot move your IRA assets into your employer’s plan. 

Is there a penalty for withdrawing early?

If you choose to withdraw before the required age of 59 ½, your funds will be subject to a 10 percent tax penalty. However, there are some exceptions to this that you can learn more about here. 

Your retirement is too important to not have all of your questions and concerns answered. Meet with us to learn more about your retirement options and how to get your finances set up for success. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

retirement

Saving For Retirement in Your 30’s

Congratulations, after your roaring twenties, you have made it to the thriving thirties. Unfortunately, with another candle added to the cake comes another responsibility. People in their thirties have a very high amount of expenses from a house payment to the cost of little ones, which is why we wanted to offer the following solutions to saving.

Automate Savings

You have hopefully already begun a savings account for the other financial goals in your life. If not, no worries! You’ve likely decided that this needs to be a priority now, or you wouldn’t be reading this blog. A simple way to start is to set up a percentage to be automatically put into a 401(k).

Many employers will automatically do this for you with each of your paychecks. If they don’t, this is something you will be able to set up on your own, so you don’t accidentally spend the money instead of investing in your future! If they already do this for you, consider increasing the amount even more.

Compound Interest

You’ve probably been saving for retirement since you became an adult, right? We would be very surprised if you did! A majority of Americans in their 20s and 30s have less than 10k saved towards retirement. If you’re late to the party, that’s okay! If you are thirty now, you still have until you are 65 to gain compound interest on your savings. Saving a little now will grow tremendously over the next thirty years.

Don’t Cash Out

You’ve probably been working for a while and have had a few different jobs. Even more likely, you will have more than one job within the next twenty years. A hard rule of thumb is to never cash out of your retirement policy when you switch employers. The money may be enticing, but it is crucial to roll it into your next retirement account to avoid the fees of withdrawing early. If you roll the money into a new account, it can be worth ten times the amount come retirement.

Keep Your Eye On That Golden Sunset

We understand you have many responsibilities you are managing daily. It can be difficult to picture retirement when you have so many other things or people fighting for your attention. However, retirement will come and the responsibilities will dissipate if you plan correctly. Try to not let the urgent things of today take priority over the important things of tomorrow. Instead of splurging on that brand new car, consider buying used and put extra money away for your golden years!

If you need help planning for your retirement, come see us at Peoples Bank & Trust for guidance! We have numerous solutions to help you save for the future.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender