Individual Retirement Accounts (IRAs)

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Summary

The thought of a relaxing retirement is high on anyone’s priority list, but like any other time in your life, your retirement may be marked by financial ups and downs. Fortunately, a well-thought-out strategy, like an IRA from Baylake Bank, can help you stay on a path toward a comfortable retirement.  

Choose from our traditional or Roth options and benefit from interest above standard savings and the associated tax advantages* each plan provides. Start planning for tomorrow, starting today.

Details 

  • Competitive interest above standard savings rates
  • Traditional and Roth IRA options
  • No setup fees
  • No monthly or annual maintenance fee/service charge
  • Annual contribution limits apply
  • Additional $1,000 "catch-up" contribution allowed for ages 50+
  • Funds can be used to purchase certificates of deposit (CDs) within IRA
  • Minimum deposit to open varies based on the type of IRA (consult a Personal Banker for details)
*Consult a tax advisor.
Traditional vs. Roth

There are advantages to both traditional and Roth IRAs. One of the biggest differences is the time at which you see the most advantage. A traditional IRA provides potential tax relief today, while a Roth IRA has the potential for the most tax benefit at time of retirement.  

Traditional IRA

  • No income limits to open
  • No minimum contribution requirement
  • Contributions are tax deductible on state and federal income tax*
  • Earnings are tax deferred until withdrawal (when usually in lower tax bracket)
  • Withdrawals can begin at age 59 ½
  • Early withdrawals subject to penalty**
  • Mandatory withdrawals at age 70 ½  

Roth IRA

  • Income limits to be eligible to open Roth IRA***
  • Contributions are NOT tax deductible
  • Earnings are 100% tax free at withdrawal*
  • Principal contributions can be withdrawn without penalty*
  • Withdrawals on interest can begin at age 59 ½
  • Early withdrawals on interest subject to penalty**
  • No mandatory distribution age
  • No age limit on making contributions as long as you have earned income  
*Subject to some minimal conditions. Consult a tax advisor.
**Certain exceptions apply, such as healthcare, purchasing first home, etc.
***Consult a tax advisor.
Withdrawal Information

When Can I Withdraw Funds without Incurring any IRS Penalties?

  • First-time home purchase
  • Medical expenses - with exceptions
  • Health Insurance premiums - if unemployed
  • Higher education expenses
  • Qualified reservist
  • Qualified HSA funding distribution
  • Customer has reached age 59 ½
  • Death
  • IRS tax levy

Traditional IRA - Distributions from traditional IRAs and most employer-sponsored retirement plans are taxed as ordinary income and may be subject to an additional 10 percent federal income tax penalty if taken prior to reaching age 59½ or for one of the 9 reasons listed above. 

Roth IRA - Unlike a traditional IRA or an employer sponsored retirement plan, a Roth IRA is not subject to annual required minimum distributions after age 70½. As long as Roth IRA withdrawals take place after age 59½ or for one of the 9 reasons listed above, and the account has been open for at least five years, distributions will be free of federal tax and penalties. 

When Must I Withdraw Funds?

Traditional IRA - When you reach your age 70½ year, you must begin to take minimum required withdrawals or severe penalties will be imposed. 

Roth IRA - There are no required distributions from a Roth IRA.

Talk with a Personal Banker near you for more information about IRA withdrawals.