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Investment Services

 

 

 

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IRAs

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Citizens National Bank offers both personal and business retirement plans. There are several options to consider and friendly staff to help you make the choice that is right for you. We can assist you in setting up new IRAs, rolling over employer qualified plans, transferring IRA accounts, and converting from a regular IRA to a Roth IRA.

 

  • Roth IRA The Roth IRA provides tax-deferred earnings but is non-deductible at the time you contribute to the account. Basically, this means you pay the tax when you contribute instead of when you take funds out; anything you've earned in the meantime also can be taken tax-free, for qualified reasons. Contribute to a Roth even after age 70½ with earned income. FDIC insured up to $250,000.

 

  • Traditional IRA Contributions can be fully tax-deductible if you are not an active participant in an employer retirement plan (otherwise phase-out rules apply). Investments grow on a tax-deferred basis. Earnings are taxed only upon withdrawal. You must have earned income and not reach 70½ by the end of the year to deposit to an IRA. FDIC insured up to $250,000.

 

  • Coverdell Education Savings Account The Coverdell Education Savings Account allows parents and others to save for children's educations. Coverdell Education Savings Accounts are only available to children under the age of 18. Maximum contribution of $2,000 may be contributed annually. Interest earnings are not taxed if used for qualified education expenses.

 

  • SIMPLE IRA Savings Incentive Match Plans for Employees is for businesses with less than 100 employees. Small business owners and their employees, farmers and sole proprietors are eligible, if they have no other Qualified Plan. See us for the excellent reasons to start a SIMPLE IRA. Contributions of up to $11,500 can be deducted from gross income ($14,000 for ages 50 & over). We also offer qualified plans and SEP accounts for businesses.

 

Comparing the two types of typical IRAs


 

  Traditional IRA Roth IRA
Tax Advantage
Eligibility
  • Tax-deferred earnings.
  • You must have earned income equal to or greater than your contribution.
  • No maximum income limit
  • You must be under age 70 1/2
  • Tax-deferred earnings.
  • You must have earned income equal to or greater than your contribution.

Your modified adjusted gross income must fall within the limits prescribed by the IRS.

Minimum initial contribution
  • $25
  • $25
Maximum contribution allowed by law
  • $5,000 for tax year 2012
    ($6,000 if you're age 50 or older)
  • $5,500 for tax year 2013
    ($6,500 if you're age 50 or older)
 
  • $5,000 for tax year 2012
    ($6,000 if you're age 50 or older)
  • $5,500 for tax year 2013
    ($6,500 if you're age 50 or older)

The maximum Roth contribution depends on your income.

Tax deductibility
  • If you're not covered by an employer-sponsored retirement plan, contributions are fully deductible regardless of income.
  • If you're covered by an employer-sponsored retirement plan, your deductible amount depends on your income.
  • Contributions are nondeductible.
Taxes on withdrawls
  • Ordinary income tax on earnings and deductible contributions.
  • No federal tax on nondeductible contributions.
  • State tax may apply.

Distributions from contributions are tax-free.

  • Distributions from earnings are federally tax-free if you've had your Roth IRA for at least five years and you're over age 591/2, or you're under age 591/5, you've had your Roth IRA for at least five years, and the distribution is due to your death or disability or for a first-time home purchase ($10,000 lifetime maximum).
  • State tax may apply.
Penalty for early withdrawal
  • 10% federal penalty tax on withdrawals before age 59 1/2 unless an exception applies.
  • Distributions from contributions are penalty-free.
  • 10% federal penalty tax on withdrawals before age 59 1/2 unless an exception applies.