Individual Retirement Accounts

Individual Retirement Accounts are available for individuals to set aside funds for retirement and take advantage of tax deferred or tax free interest income. You will want to consult with your tax advisor for details, but in the meantime, Bank of Walterboro can get you headed in the right direction.

Features

$500 minimum deposit on our fixed rate 18 or 36 month term IRA

$25 initial minimum deposit on our 18 or 36 month variable rate IRA and you can make additional deposits

Automatically renewable after 10 day grace period

No administration fees

Penalties

Early withdrawal will result in forfeiture of three month’s interest. No forfeiture of interest for IRA holders 59 1/2 and older.

With the current law, the maximum contribution to a traditional IRA is $5,500 for tax year 2016 and 2017. An additional $1,000 contribution can be made by qualified individuals over the age of 50. In addition, you will receive a full tax deduction for your contribution if you and your spouse are not covered by an employer sponsored retirement plan. If you or your spouse are participants in an employer sponsored retirement plan, your income and filing status will determine the amount of your deductible contribution.

The following table shows the effect of the modified adjusted gross income (MAGI) thresholds for active participants on deductibility. These thresholds are subject to cost-of-living adjustments (COLAs).

Traditional IRA Deductibility MAGI Thresholds
Filing Status Tax Year Full Deduction Partial Deduction No Deduction
Single 2016 ≤ $61,000 Between$61,000 and $71,000 ≥ $71,000
2017 ≤ $62,000 Between$62,000 and $72,000 ≥ $72,000
Married, Joint 2016 ≤ $98,000 Between$98,000 and $118,000 ≥ $118,000
2017 ≤ $99,000 Between$99,000 and $119,000 ≥ $119,000
Married, Joint (not active participant but spouse is) 2016 ≤ $184,000 Between $184,000 and $194,000 ≥ $194,000
2017 ≤ $186,000 Between$186,000 and $196,000 ≥ $196,000
Married, Separate 2016 N/A < $10,000 ≥ $10,000
2017 N/A < $10,000 ≥ $10,000

See IRS Publication 590 for more information.

Important note:

The 10% penalty for early withdrawals does not apply to distributions of up to $10,000 for first time home buyer expenses or to distributions used for qualified educational expenses.

ROTH IRA

With a Roth IRA, your withdrawals can be completely tax-free – but you cannot deduct your annual contributions. The maximum contribution to a Roth IRA is $5,500 for tax year 2016 and 2017. An additional $1,000 contribution can be made by qualified individuals over the age of 50.

It is always best to consult your tax advisor for details relevant to your specific needs. However, here are a few basic rules that govern Roth IRA’s:

You can contribute to a Roth IRA if:

You have earned income (or your spouse has earned income) AND

Your modified adjusted gross income (MAGI) cannot exceed certain limits (see below)

Roth IRA Eligibility MAGI Thresholds
Filing Status Tax Year Full Contribution Partial Contribution No Contribution
Single 2016 ≤ $116,000 Between$116,000 and $131,000 ≥ $131,000
2017 ≤ $118,000 Between $118,000 and $132,999 ≥ $133,000
Married, Joint 2016 ≤ $184,000 Between $184,000 and $194,000 ≥ $194,000
2017 ≤ $186,000 Between $186,000 and $195,999 ≥ $196,000
Married, Separate 2016 N/A < $10,000 ≥ $10,000
2017 N/A < $10,000 ≥ $10,000

See IRS Publication 590 for more information.

An aggregate of $5,500 annually can be contributed to a combination of Roth & Traditional IRA's.

You do not pay taxes on your earnings if they are part of a qualified distribution

A qualified distribution includes participation in a Roth IRA for over 5 years and:

  • Distributions made on or after the date on which you attain age 591/2; or
  • Distributions made to your beneficiary (or your estate) upon your death
  • Distributions attributable to your being disabled
  • Distributions for qualified first-time home buyers (up to $10,000)