Explain to the client how each IRA type functions, but for investment advice, refer the client to CCI.
Individual Retirement Accounts (IRAs) help clients to plan and save for their future goals and dreams. Capital City Bank offers several types:
Traditional IRA
Traditional IRAs allow clients to take advantage of tax-deferred incentives on both the money that is contributed and the money earned in these accounts, allowing clients to save more for their retirement. Clients pay taxes on these funds at the time they take a distribution, usually during retirement.
* Clients can contribute up to $6,500.00 after the age of 50 until the age of 70 1/2.
** Clients pay taxes at the time they take distributions from the account. Clients are required to take distributions after the age 70 1/2.
Roth IRA
Roth IRAs allow clients to take advantages of an IRA without worrying about taxes when they withdraw money from it. The client contributes after-tax funds to the Roth IRA. They do not pay taxes on the money earned.
* Clients can contribute up to $6,500.00 after the age of 50.
** Clients pay taxes at the time they make contributions to the account. Clients are not taxed on the money earned.
Traditional vs. Roth
| Traditional | Roth |
|---|---|
| Contributions are generally deductible | Contributions are NOT deductible |
| *No age limit to make regular contributions |
No age limit to make regular contributions |
| No income limit to contribute | Income limit to contribute |
| Mandatory distributions for IRA owners age 70 1/2 or older by the end of 2019. Mandatory distributions upon attaining age 72 for other IRA owners. | No IRA owner mandatory distributions |
| Pretax amounts are generally taxable when distributed | Distributions are generally tax free |
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Coverdell Education Savings Account
The Coverdell Education Savings Account, also referred to as the Education IRA, is an account created as an incentive to help parents and students save for education expenses, including:
- Enrollment or attendance fees at eligible educational institutions
- Elementary and secondary school expenses at any public, private, or religious school
- College, university, vocational school, or other post-secondary educational institutional expenses
- Books, supplies, and equipment
- Academic tutoring
- Special needs services
Simplified Employee Pension Plan (SEP)
A SEP plan is an employer-sponsored retirement plan which allows employers to make deductible contributions directly to each eligible employee's traditional IRA (SEP-IRA).
A business of any size, even self-employed, can establish a SEP.