Retirement Accounts

Individual Retirement Accounts (IRA's), Roth IRA's and Coverdell Education Savings Accounts (CESA's or Education IRA's): These may be deposited in Bath State Bank Certificates of Deposit (“CDs”) at the same rates as the current fixed-term CDs for terms of 12 to 72 months.

Also available to IRA's is a CD with a variable rate. This type of IRA CD is written for a term of 18 months. The interest rate may be adjusted on the 1st day of the following months: February, May, August and November. Another option for IRA funds is a one-month CD that earns the same rate as the Early Harvest Money Market Account. See rate area for more information.

Limitations: The minimum deposit amount for all IRA's is $50.00. There is no annual fee for IRA's nor for IRA transfers.* (*As with any CD, there may be a penalty assessed if the CD is cashed in before maturity.)

Self-Directed IRAs: Bath State Bank can also serve as custodian for self-directed IRA's. We can facilitate the placement of trades with the benefit of institutional pricing. We can also offer safekeeping, record keeping and reporting as well as the services of a Registered Investment Advisor. The custodial fee is based on how many of the services we provide.

Coverdell Education Savings Account (formerly known as Educational IRA): Contributions are tax free, but not tax deductible. Designed to help save for educational costs. $2,000 per year maximum contribution; however, a child's total cannot exceed the max. People interested in saving for a child's education,Click here to read more.

Are you new to IRAs?

Q: What is an IRA?
A: An Individual Retirement Account, or IRA, is an account into which you can save and invest money for retirement (provided you’re eligible), with potential tax benefits. The two basic types are the Traditional IRA and the Roth IRA. Each has slightly different rules and benefits.

Q: What’s the difference between a Traditional IRA and a Roth IRA?
A: In a word: taxes. Basically, the difference lies in whether you pay taxes on money the year you put it into your IRA account, or pay taxes when you take distributions (when you take money out of your account.)

If you earn $50,000 a year and put $2,000 in a Traditional IRA, you will be able to deduct the contribution from your income taxes (meaning you will only have to pay tax on $48,000 in income to the IRS.) At 59-1/2, you may begin withdrawing funds but will be forced to pay taxes on all of the capital gains, interest, dividends, etc., that were earned over the past years. On the other hand, if you put the same $2,000 in a Roth IRA, you would not receive the income tax deduction. If you needed the money in the account, you could withdraw the principal at any time (although you will pay penalties if you withdraw any of the earnings your money has made.) When you reach retirement age, you could then withdraw money 100% tax free.

The Roth IRA is going to make more sense in most situations. Unfortunately, not everyone qualifies for a Roth. A person filing his/her taxes as “single” can not make over $95,000. Married couples are better off, with a maximum income of $150,000 yearly.

Deciding whether to open a Roth IRA or Traditional IRA is a major decision with potentially large financial consequences. Both forms of the IRA are great ways to save for retirement, although each offers different advantages.

Traditional IRA Profile Roth IRA Profile
  • Tax deductible contributions (depending on income)
  • Withdraws can begin at age 59 1/2 and are mandatory by 70 1/2 (early withdraws may be subject to an IRS penalty)
  • Taxes are paid on earnings when withdrawn from the IRA
  • Available to everyone; no income restrictions
  • All funds withdrawn (including principal contributions) before 59-1/2 are subject to a 10% penalty (subject to exception)
  • Contributions are not tax deductible
  • No mandatory distribution age
  • All earnings and principal are 100% tax free if rules & regulations are followed
  • Available to single-filers making up to $95,000 or married couples making a combined max. of $150,000 annually
  • Principal contributions can be withdrawn any time without penalty (subject to minimal conditions)

Q: Where can I open an IRA?
A: IRA’s of both types can be opened through Bath State Bank. It requires no more than a few minutes’ visit with Michelle or Laura.

Q: How much $$$ do I need to open an IRA?
A: You can open an IRA at Bath State Bank for $50.

Q: What if I have questions about IRAs?
A: Simply call us at 765-732-3022, and ask to speak with Michelle or Laura.