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Individual Retirement Accounts (IRAs)

Consider These Tax-Advantaged Investments

Thinking About Retirement

An individual retirement account, or IRA, provides tax advantages for retirement savings. There are different IRA solutions available. At First Source, your IRA earns dividends and it is federally insured by NCUA, though there is an early withdrawal penalty. 

We offer Traditional IRAs and Roth IRAs, along with a Money Market IRA and IRA Term Share Certificate. We also offer a Coverdell Education Savings Account (ESA).

ESA: Learn More


What is an IRA?

An IRA is simply a place to set money aside for your retirement. The difference between Traditional and Roth IRA options is essentially how you are taxed.


Traditional IRA 

A Traditional IRA allows contributions to be tax deferred up front. Any account growth, which includes account interest earned or reinvested, is tax deferred. When you take out money (a distribution), it is taxed as ordinary income. You can take distributions without penalty after you’re 59½, or the IRS will force distributions once you reach 70½. Check contribution and income limits for each year you plan to contribute, as they are subject to change. 


Roth IRA

Where a Traditional IRA gives you a tax deduction on your contributions, a Roth IRA lets you save when you take your money out. Any interest growth, as well as your distributions during retirement, are federal tax-free. A Roth IRA also allows you to make withdrawals of your contributions at any time, for any reason, without penalties or taxes. The growth, or interest, is the only part for which you’ll have to wait until you’re at least 59½ to withdraw without penalties or taxes. There are some restrictions depending on your age and income. Check contribution and income limits for each year you plan to contribute, as they are subject to change.


Which is Best for You?

Generally, if you expect to be in a higher tax bracket in the future, the Roth IRA is a better choice. If you believe you are at or near your highest tax bracket now and will be in a lower bracket when you retire, a Traditional IRA could be a better choice. You’ll also want to consider what you expect your future income tax to be. Depending on your retirement income level, much of your retirement income could be taxable. 


Getting Started

We’ll discuss your personal financial situation and plans for the future, as well as the variables of each type of IRA, and how they could fit into your overall retirement strategy. Start by making an appointment with us, and Retire Smarter. 

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IRA Options


IRA Share/Sponsored Employee Plan (SEP)

  • IRA Traditional or Roth
  • SEP Roth
  • Monthly dividends
  • No minimum balance
  • Early withdrawal penalties may apply

IRA Term Share Certificate

  • Direct transfer and rollovers available
  • Automatic renewal options
  • Monthly dividends
  • Fixed, tiered rates based on term
  • Terms from one to four years 
  • $1,000 minimum deposit  
  • Early withdrawal penalties may apply
  • Deposits not permitted until maturity

Money Market IRA

  • Direct transfer and rollovers available
  • Monthly dividends
  • Tiered rates
  • $0.01 minimum to earn dividends
  • Early withdrawal penalties may apply

Coverdell Education Savings Account
Coverdell ESA

  • For elementary, secondary or college expenses
  • Tax deferred growth
  • No tax paid on qualified withdrawals
  • Account regulated by the IRS – IRS Coverdell ESA Guidelines

 

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