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Individual Retirement Accounts

An excellent tool for retirement savings.

Depending on the type of IRA you choose, contributions may be tax deductible and will grow either tax-deferred or tax-free!

There are two types of IRAs: Traditional versus Roth. The primary difference between a Traditional IRA and Roth IRA is the type of tax benefit each offers.
 
Traditional IRAs offer tax-deferred growth potential. You make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. Many retirees find themselves in a lower tax bracket than they were in pre-retirement, so the tax-deferral means the money may be taxed at a lower rate.
 
Roth IRAs offer tax-free growth potential. You make contributions with money you've already paid taxes on (after-tax), and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met. Since contributions to a Roth IRA are made with after-tax dollars, there is no tax deduction regardless of income.
 
For more information about the two types of IRAs, including details about eligibility, refer to the chart below.  

Traditional ira roth ira
Age Anyone with Earned Income Can Contribute
Anyone, regardless of income level, even after age 72. Anyone, even after age 72.
Spouses with One
Earned Income Can Contribute For Both
Yes Yes
Contributions After
Age 72  
Allowed Allowed
2020 Maximum Annual Contributions
(The maximum can be contributed to one IRA type or the other – or – split between both).
(For ages 50 and over, the amount includes $1,000 catch-up).
Under 50 - $6,000
50 and Over - $7,000
Under 50 - $6,000
50 and Over - $7,000
2019 Maximum Annual Contributions
(The maximum can be contributed to one IRA type or the other – or – split between both).
Under 50 - $6,000
50 and Over - $7,000
Under 50 - $6,000
50 and Over - $7,000
Catch-up Contribution Limits for Anyone
Age 50 and Over
Up to $1,000 Up to $1,000
Contribution Restrictions
(May be limited depending
on your Modified Adjusted
Gross Income)
Yes
(If active participant in
employer retirement plan)
Yes
Contribution Deadlines
(Contributions can be made between Jan 1 and the date your tax return is due for that tax year, excluding extensions).
Typically, April 15 of the following year Typically, April 15 of the following year
Earnings Grows tax-deferred until withdrawn Grows tax-free
Taxes Upon Withdrawal
Withdrawals are taxed
as income 
No
(Unless taxed for early withdrawal)
Tax Advantages Yes
(Deductible contributions tax-deferred until withdrawal)
Yes
(Qualified withdrawals are tax-free after age 59½ and 5 years invested)
Tax Deductibility
for Contributions

Yes
(Tax deferred up to 100% depending on MAGI and participation in an employer-sponsored retirement plan)
No
(Taxes are paid up-front)
Most Withdrawal Restrictions Before Age 59½ Result in IRS Penalties.
Yes Yes
IRS Penalty for Early Withdrawal.
None if:
• Over age 59½
• Qualified medical expenses
• First-time home purchase
     (up to $10,000)
• Child Birth/Adoption
     (up to $5,000)
• Death or disability
• Qualified college expenses
• Due to IRS levy
See your tax advisor for other distribution options.
Yes Yes
Bank Penalty for Early Withdrawal Penalties Apply Yes Yes
Required Distributions 
Yes
(Must begin when
participant turns 72)* 
Yes
(After death of the participant)
Age at Which Withdrawals Must Begin 72* N/A
*Unless IRA owner was born prior to July 1, 1949, then required distributions must begin April 1st of the year following the year they attain age 70½.
 
Refer to Providence Bank’s Truth in Savings Disclosure for additional account information. Please ask a Personal Banker for current rate information. Information for this chart was obtained from the IRS website. Where language is unclear, assumptions have been made. Investors must consult with their tax advisor or legal counsel for advice and information concerning their particular situation. Representatives of this bank may not give legal or tax advice. 
 

Depending on the type of IRA you choose, contributions may be tax deductible and will grow either tax-deferred or tax-free!

Who’s eligible to contribute
Anyone under age 70 ½ who has earned income, regardless of income level. Spouses with one earned income can contribute for both.
 
Maximum Annual Contributions
2020 - Under 50- $6,000 | 50 and over- $7,000 (including $1,000 catch-up)
2019 - Under 50- $6,000 | 50 and over $7,000 (including $1,000 catch-up)
 
Contribution Restrictions
Yes, if active participant in employer retirement plan. Deductibility may be limited based on modified adjusted gross income (MAGI).
 
Catch-up Contribution Limits
Anyone age 50 and over is eligible to make additional “catch up” IRA contributions of up to $1,000.
 
Contribution Deadlines
IRAs for the taxable year can be opened and funded anytime between the first day of your tax year and the date your tax return is due for the year, excluding extensions. This due date is normally April 15 of the following year.
 
Contributions after age 70 ½
Not Allowed.
 
Tax advantages
Deductible contributions tax-deferred until withdrawal.
 
Tax Deduction
Yes. Contributions up to the limit are fully tax-deductible if you are not an active participant in a retirement plan. Phaseout rules apply.
 
IRS Penalty for Early Withdrawal
None if:
• Over age 59 ½
• Death or Disability
• Qualified Medical expenses
• Qualified college Expenses
• First time home purchase (up to $10,000)
• Due to IRS Levy
See your tax advisor for other distribution expenses options.
 
Bank Penalty for Early Withdrawal
Standard Bank Early Withdrawal Penalties Apply.
 
Required Distributions
Must begin when participant turns 70 ½.
Who’s Eligible to Contribute
As long as you have earned income, you can establish and contribute to a Roth IRA even after age 70 ½. Spouses with 1 income can contribute for both.
 
Maximum Annual Contributions
2020 - Under 50- $6,000 | 50 and over- $7,000 (including $1,000 catch-up)
2019 - Under 50- $6,000 | 50 and over $7,000 (including $1,000 catch-up)
 
Contribution Restrictions
Contribution may be limited depending on your modified adjusted gross income (MAGI).
 
Contribution Deadlines
IRAs for the taxable year can be opened and funded anytime between the first day of your tax year and the date your tax return is due for the year, excluding extension. This due date is normally April 15 of the following year.

Contributions after age 70 ½
Allowed.
 
Tax Advantages
Qualified withdrawals are tax-free after age 59 ½.
 
Tax Deduction
No deductions for contributions. Tax-free withdrawal replaces this benefit.
 
IRS Penalty for Early Withdrawal
None if:
• Over age 59 ½ plus Roth IRA established for at least 5 years
• Death or Disability
• Qualified Medical Expenses
• Qualified college Expenses
• First time home purchase (up to $10,000)
• Due to IRS Levy
See your tax advisor for other distribution expenses options.
 
Bank Penalty for Early Withdrawal
Standard Bank Early Withdrawal Penalties Apply.
 
Required Distributions
After death of the participant.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refer to Providence Bank’s Truth in Savings Disclosure for additional account information. Please ask a Personal Banker for current rate information. Information for this chart was obtained from the IRS website. Where language is unclear, assumptions have been made. Investors must consult with their tax advisor or legal counsel for advice and information concerning their particular situation. Representatives of this bank may not give legal or tax advice.