What is an IRA?

Published: Mar 16, 2017 3:18:00 PM

What is an IRA?
Whether your retirement goal is traveling the world, or staying close to home, an IRA can help you fulfill your dreams. Individual Retirement Accounts or IRAs offer tax advantages* while you save, so you can maximize your funds.

 How does an IRA work?
When looking for a savings account, consider an IRA as an option. There are many different types of IRA accounts to choose from such as a traditional (pre-tax) or Roth (after tax) account – or even a CD, CDtwo or Money Market. Each option has its perks. IRAs offered at financial institutions are federally insured up to a specific amount required by law.

What’s the catch?
You will need to work with your tax advisor (not your bank) to maximize your tax benefits from an IRA. There is also an annual contribution limit on IRAs. For example, the 2017 contribution limit is $5,500, however, if you are 50 or older you can have a higher ‘catch-up limit’ of $1,000 for a total of $6,500. However, be aware, you may have to pay a penalty for early withdrawals from your Individual Retirement Account. You will also receive a 1099 reporting your interest made on an IRA each year. 

What kind of interest can I get in an IRA?
Typically an IRA offers a more competitive interest rate than an average savings account.

What do I need to open an IRA?
You will need your driver’s license, address (if different than your driver’s license, you will need proof of that address), your social security number, your date of birth and a deposit that meets your bank’s minimum amount required. It’s also important to think about who your beneficiary on this account will be. You will need their name, address, birthdate and social security number. You are not able to have joint owners or authorized signers on this type of account, as it is an “individual” retirement account.

Do you have additional questions about IRAs?
Stop by The Bank of Tioga location or call (701) 664-3388 to open an IRA. With an individual retirement account from The Bank of Tioga you can view account balances 24/7 with TBOT Online and the Mobile Money app. Even better, The Bank of Tioga does not charge any setup or maintenance fees on IRAs.


*Consult a tax advisor.