Some say investing is the most important part
of planning for your financial future.
We say it’s the other way around.
Investing, regardless of what you invest in, starts with a goal. Obviously, you can’t get where you’re going without a plan. It all depends on what you really want: a lot of people just work hard, save as much as they can and hope for the best. But when you have goals in mind, our bankers can work with you to recommend the right investment products that will work within your strategy and means to achieve those objectives, whether it’s being able to retire as planned to your daughter getting accepted to medical school to starting a new business. Best of all, every investment product offered by RNB has the security of FDIC insurance. That’s because the last thing you need when you’re planning for the future is more uncertainty. Special rates apply for Hometown Checking customers.
- Money Markets
- Coverdell Education Savings Account (ESA)
- Savings Bonds
Certificates of Deposit: Seven days or 60 months, earn a higher rate of interest without a higher level of risk.
Certificates of deposit are a great way to earn a higher level of interest on your money by committing your funds for a specific period of time. Generally, the longer the commitment, the higher the interest rate. RNB offers you a selection of CDs with maturities ranging from 7 days to 60 months to suit your situation and savings goals. All of them are easy to open, offer guaranteed—and highly competitive—yields and provide the peace of mind of FDIC insurance. Best of all, you can get started with as little as $100, and Hometown Checking customers qualify for special rates on all CDs. You can have the interest added to your principal, paid by check or credited to another RNB account. Because they are term investments, there may be penalties for early withdrawal, but with the level of interest you’re earning, why would you do that? Pick one, and start earning.
Money Markets: A bigger commitment means bigger returns, plus the ability to use your money as needed.
If you like the idea of a savings account, but have more to save and want a higher level of interest without locking into a CD, then an RNB Money Market Account may be just what you need. With a money market account your money works harder, and you still have easy access to it as long as you maintain a minimum balance. Interest rates are tiered to your balance – the bigger the amount, the higher the rate – and interest is compounded monthly and paid monthly. Let our money market account help you reach your goals faster.
- $1000 minimum to open
- Tiered interest rates
- Easy access: Up to six withdrawals or transfers by means of check, or pre-authorized or automatic transfer, during a statement cycle
- Unlimited deposits
- Free checks
- Free Online Banking
- ATM card
- No monthly service charge with a daily balance of $1,000 or more
- FDIC insured
You can’t predict the future, but the right IRA will help you plan for it.
There’s a conventional wisdom that says to adequately plan your retirement income you should figure on depleting your savings at the rate of about 4% per year. Of course, that doesn’t take into account your dream cruise, medical school for your son or daughter, a wedding (or two) or any of the other things that come up in life. At RNB, we can help you plan for the unexpected. Our fixed and variable rate IRAs are structured using safe, secure FDIC-insured instruments that add to your peace of mind while they add to your nest egg. They’re easy to open and we can help you rollover an existing IRA, too. So whether you’re saving for retirement or education, our IRAs provide the features, tax-advantages and benefits that will help you make the most of your money now, to make the most of your life later.
Not sure if a Traditional or Roth IRA is right for you? Check this comparison, then give us a call
You may contribute any amount up to 100 percent of your compensation or the amount set by the IRS, whichever is less, aggregated between a Traditional and a Roth IRA. Additionally, if you have attained the age of 50 or older by the end of your taxable year, you are eligible to make catch-up contributions.
Roth IRA contributions are further limited by your MAGI (Modified Adjusted Gross Income). See IRS Publication 590 for more information and to calculate Roth IRA contribution amounts.
A traditional IRA allows you to defer taxes on the earnings on your contributions until they are withdrawn.
Also, certain contributions are tax deductible in the tax year for which you make them.
A Roth IRA allows only nondeductible contributions and features tax-free withdrawals for certain distribution reasons after a five-year holding period. Since Roth IRA contributions are nondeductible and taxed in the year they are earned, if you expect to be in a higher tax bracket when you retire, you may benefit more from a Roth IRA than from a Traditional IRA.
You are eligible to establish a Traditional IRA if you are younger than age 70 ½ for the entire tax year and you or your spouse have compensation.
You are eligible to establish a Roth IRA if you or your spouse have compensation and your modified adjusted gross income (MAGI) does not exceed certain prescribed limits. See IRS Publication 590 for more information.
You may establish a Traditional or Roth IRA even if you already participate in or are receiving contributions from a retirement plan sponsored by your employer, which may include certain government plans, tax-sheltered annuities, simplified employee pension (SEP) plans, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE), or qualified plans.
Tax Deductibility of Contributions
Active participation in employer-sponsored retirement plans and MAGI determine whether you can deduct your Traditional IRA contribution. Even if you cannot deduct your contribution, you can still make nondeductible contributions and take advantage of the tax-deferred earnings.
Roth IRA contributions are not deductible regardless of active participation status and/or MAGI
Tax Deferred Earnings
Taxes are paid on the distribution of all tax-deductible contributions and on all earnings. Distributions that include these amounts are taxed as income in the year they are withdrawn.
Since regular and spousal Roth IRA contributions are nondeductible, distributions of these amounts are not taxable. Another nice Roth IRA feature is that the rules consider all contributions to be distributed before any earnings. This gives you easier tax-free access to the assets. Earnings, however, may be subject to tax unless they are removed as a qualified distribution.
Age for Required Distributions
When you reach your age 70 ½ year, you must begin to take minimum required distributions or risk additional penalty taxes.
You are not required to take distributions from your Roth IRA.
After age 59 ½, withdrawals from a Traditional IRA are not subject to the federal tax penalty for premature distribution.
A qualified distribution is defined as a distribution of earnings if five years have passed since you established your first Roth IRA and you are at least age 59 ½, permanently disabled, taking first-time homebuyer distributions, or deceased. A distribution of earnings for any reason, other than stated above, is considered a nonqualified distribution.
Qualified Early Withdrawals
You may be able to withdraw assets from your Traditional or Roth IRA without incurring the 10 percent premature-distribution penalty tax before the age of 59 ½ for the following reasons: Disability, substantially equal periodic payments, medical expenses in excess of 7.5 percent of your adjusted gross income, health insurance premiums if you have been receiving unemployment compensation for at least 12 weeks, distributions paid directly to the IRS due to an IRS levy, conversion to a Roth IRA, recharacterization, rollover to an employer-sponsored qualified plan, qualified higher education expenses, a first-time home purchase, or a qualified reservist distribution.
Roth IRA distributions of regular and spousal contribution amounts are always free of penalty tax – regardless of timing or reason.
Consult your tax advisor for more information and details.
Coverdell Education Savings Account (ESA)
A Coverdell Education Savings Account (ESA) is an account created as an incentive to help parents and students save for education expenses.
The total contribution for the beneficiary of this account cannot be more than $2,000.00 in any year, no matter how many accounts have been established. A beneficiary is someone who is under the age 18 or is a special needs beneficiary.
Contributions to a Coverdell ESA are not deductible, but deposits grow tax-free until distribution. Taxes on distributions will not be owed by the beneficiary if the distribution(s) are less than a beneficiary’s qualified education expenses at an eligible institution. This benefit applies to qualified higher education expenses as well as to qualified elementary and secondary education expenses.
- The beneficiary does not have to be a family member
- If the money is not used for education, the account will eventually be distributed to the beneficiary
- A Coverdell ESA is like a 529 Plan if you are applying for federal financial aid
- The account must be fully withdrawn within 30 days of the beneficiary reaching age 30
Certain Coverdell ESA benefits will expire after 2010 unless the Government changes the rules: K-12 expenses will no longer qualify, the annual contribution limit will be reduced to $500, and withdrawals will not be tax-free in any year in which a Hope Credit or Lifetime Credit or Lifetime Learning Credit is claimed for the beneficiary.
Savings Bonds: Make an investment for your future that’s also an investment in the future of America.
Savings Bonds make excellent gifts for birthdays, baby showers, graduations and many other occasions. These reliable, low-risk government-backed savings products can be used toward financing higher education, as supplemental retirement income, as an alternative to CDs or money market accounts or simply to put money aside for future contingencies. They’re exempt from state and local taxes, and may have additional tax benefits when used for educational purposes*. To purchase Savings Bonds, go to www.treasurydirect.gov. We can provide you with values on existing bonds and redeem bonds you already hold in any of our branches.
*Randolph National Bank does not give tax advice. Please consult your own tax advisor.