Elmira Savings Bank

Home

Mortgage WebCenter

Individual Retirement Accounts

The sole purpose of an IRA is to help you save for your retirement while realizing significant tax advantages. An IRA is a smart move whether you’re using it as your primary source of retirement income or as a supplement to other retirement investments or employer-sponsored plans.

Safe. Secure. FDIC Insured. Elmira Savings Bank has a full range of savings options designed specifically to help you save for and meet your retirement goals. Each comes with the safety of FDIC insurance, the security of guaranteed returns, and the exceptional personal service of our bankers. We’ll be happy to help you choose the savings product best suited to your retirement savings needs.

Supplement your current retirement plan. Keeping all your eggs in one basket is not the best thing to do. Mixing the types of investments you have is the best course of action to minimize risk and maximize returns over the long term. That’s why now is the perfect time to consider adding an Elmira Savings Bank IRA Certificate of Deposit or PensionFlex Savings Account to your mix of retirement savings accounts. Their guaranteed returns are the perfect foil to the current volatility in the stock market. And they provide the security of FDIC insurance up to $250,000 separately from your other deposits.

Choose the IRA Account that best suits your lifestyle. The PensionFlex Savings Account works just like a regular savings account, but with higher interest earnings. You make contributions when you want in whatever manner works for you – in person, automatic deposit, payroll deduction, etc. – up to the maximum annual contribution allowed. An IRA Certificate of Deposit allows you to earn today’s interest rate for up to 5 years. Please contact us for interest rates and additional details.

Choose the Right IRA Plan. Your individual situation determines which type of IRA is appropriate for your retirement savings plan. Here are the basics of each:

traditional ira

roth ira

rollover ira

·        Anyone under age 70½ who has earned income equal to or greater than their IRA contribution amount is eligible.

·        Contributions may be tax deductible (please consult your tax advisor for details)

·        Earnings are tax-deferred until withdrawn after age 59½ when your tax rate may be lower

·        Contributions and earnings may be withdrawn IRS penalty-free after age 59½

·        A minimum distribution from the IRA is required in the year you become 70½ and every year thereafter

·        You are eligible at any age provided your adjusted gross income does not exceed:

(2008 Tax Year)

$116,000   Single Tax Filers      $169,000   Joint Tax Filers

·        Contributions are not tax deductible

·        Earnings are tax-free if withdrawn after age 59½ and the account has been open for at least five years

·        Contributions (not earnings) can be withdrawn IRS tax and penalty-free at any time

·        No minimum distribution is ever required from this IRA

·        Allows you to move your existing qualified retirement savings to Elmira Savings Bank without tax consequences

·        Allows you to maintain the tax-deferred status of qualified former employer retirement plans

Contribution Limits. Internal Revenue publishes maximum contribution limits each year. In 2010, the maximum contribution limit is $5,000. Individuals age 50 and up can add an additional $1,000 per year as a “catch-up” contribution.

Education IRA (Coverdell Education Savings Account)

A Coverdell Education Savings Account (ESA) is an account created as an incentive to help parents and students save for education expenses.

The total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special needs beneficiary.

Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. The beneficiary will not owe tax on the distributions if they 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.

Here are some things to remember about Distributions from Coverdell Accounts:

Distributions are tax-free as long as they are used for qualified education expenses, such as tuition and fees, required books, supplies and equipment and qualified expenses for room and board.
There is no tax on distributions if they are for enrollment or attendance at an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law. Eligible institutions also include any college, university, vocational school or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions are eligible.
The Hope and lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits.
If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship.

There are contribution limits for taxpayers based on the contributor’s Modified Adjusted Gross Income. Contributions to a Coverdell ESA may be made until the due date of the contributor’s return, without extensions.

If there is a balance in the Coverdell ESA when the beneficiary reaches age 30, it must generally be distributed within 30 days. The portion representing earnings on the account will be taxable and subject to the additional 10% tax. The beneficiary may avoid these taxes by rolling over the full balance to another Coverdell ESA for another family member.

Please consult your tax advisor or go to www.irs.gov for more details.

Application Information Request