IRAs

A Traditional IRA can be a powerful way to save for your future while potentially reducing your taxes today. You may benefit if:

• You are eligible to deduct Traditional IRA contributions on your federal income tax return, or

• You qualify for a Saver’s Tax Credit of up to $1,000 (or more, depending on filing status).

Who Is Eligible to Contribute?

To contribute to a Traditional IRA:

• You (or your spouse, if filing a joint tax return) must have earned income from employment.

• There is no age limit for making contributions, as long as you have eligible compensation.

Beginning with the 2020 tax year, individuals can make Traditional IRA contributions at any age. Prior to 2020, contributions were not allowed starting the year an individual turned age 70½. This age restriction no longer applies.

What Counts as Eligible Compensation?

For IRA purposes, eligible compensation generally includes income earned from working, such as:

• Wages and salary

• Tips and commissions

• Bonuses

• Self-employment income

It does not include investment income, pension income, or Social Security benefits.

Eligibility to contribute to a Traditional IRA is not affected by whether you or your spouse are covered by an employer-sponsored retirement plan, although deductibility may be.

Need More Information About IRAs?

Call 717-272-2210 or 800-489-5328 to speak with a representative.

Important Notice:
Please consult a qualified tax advisor to determine whether a Traditional IRA is appropriate for your individual tax situation.

See Contribution limits and learn more about Traditional IRAs

Roth IRA Overview

By saving for retirement with a Roth IRA, you can enjoy several long-term benefits, including:

• Tax-free qualified distributions in retirement

• No required minimum distributions (RMDs) during your lifetime

• Potential eligibility for a Saver’s Tax Credit of up to $1,000 (or more, depending on filing status)

Who Is Eligible to Contribute?

To contribute to a Roth IRA:

• You (or your spouse, if filing a joint federal income tax return) must have earned income from employment.

• Your modified adjusted gross income (MAGI) must be within IRS income limits for Roth IRA contributions. These limits vary by filing status and are adjusted periodically.

Earned income generally includes wages, salaries, tips, commissions, bonuses, and self-employment income. It does not include investment income, pension income, or Social Security benefits.

Important Note

Roth IRA contribution limits and income thresholds are subject to change, and eligibility may depend on your individual tax situation.

Important Notice:
Please consult a qualified tax advisor to determine whether a Roth IRA is appropriate for you.

See Contribution limits and learn more about Roth IRAs

Coverdell Education Savings Account (ESA)

A Coverdell Education Savings Account (ESA) allows parents, grandparents, and other eligible contributors to save for a child’s education expenses. Up to $2,000 per year per beneficiary may be contributed to help pay for qualified education expenses, including K–12, vocational, undergraduate, and graduate education.

Earnings grow tax-free, and withdrawals are also tax-free when used for qualified education expenses.

Contribution and Age Rules

• Contributions are nondeductible and are limited to $2,000 per year per beneficiary, regardless of how many people contribute.

• Contributions generally must be made before the beneficiary turns age 18, unless the beneficiary has special needs.

• Funds generally must be used by the time the beneficiary reaches age 30, unless the beneficiary has special needs.

Account Ownership and Transfers

• The account owner (not the child) controls the Coverdell ESA.

• If the funds are not used by the beneficiary, the account balance may be rolled over to another eligible family member’s Coverdell ESA without tax consequences.

Important Eligibility Note

Eligibility to contribute to a Coverdell ESA is subject to IRS income limits, which may change over time.

Important Notice:
Please consult a qualified tax advisor to determine whether a Coverdell ESA is appropriate for your situation.

Open a Coverdell ESA Today!

A Simplified Employee Pension (SEP) IRA is a no-hassle retirement plan designed for small businesses and self-employed individuals who want an easy, cost-effective way to save for retirement.

Why Consider a SEP IRA?

• Easy to establish and maintain

• Low administrative costs

• Flexible annual contributions

• Employer-funded only (employees do not contribute)

How a SEP IRA Works

A SEP IRA allows an employer—or a self-employed individual—to make tax-deductible contributions to their own Traditional IRA and to the Traditional IRAs of eligible employees. Contribution amounts are determined each year by the employer and must be made at the same percentage of compensation for all eligible employees.

Who Can Benefit?

• Small business owners

• Sole proprietors

• Partnerships and corporations

• Self-employed individuals with or without employees

SEP IRAs offer flexibility, simplicity, and the opportunity to build retirement savings without the complexity of traditional employer-sponsored plans.

Important Notice:
Please consult a qualified tax or financial advisor to determine whether a SEP IRA is appropriate for your business.

Learn more about SEPs