What is an IRA?

IRA stands for Individual Retirement Account. There are three specific types of IRAs you can get at Banner Capital Bank: Traditional IRA, Roth IRA or Student IRA.

The type of IRA that’s right for you depends on your personal circumstances, and it may change as your life stage and career change or progresses. 

What is a traditional IRA?
In a traditional IRA, you make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred. 

Many retirees find themselves in a lower tax bracket than they were in pre-retirement, so the tax deferral means the money in their traditional IRA may be taxed at a lower rate.

What is a Roth IRA?
In a Roth IRA, you make contributions with money you’ve already paid taxes on (after-tax), and your money may potentially grow tax-free. You may also be able to make tax-free withdrawals from your Roth IRA in retirement, provided that certain conditions are met.

What is a CESA or Student IRA?
Banner Capital Bank also offers a CESA IRA, which stands for a Coverdell Education Savings Account, or a Student IRA. 

A CESA IRA is a trust or custodial account set up solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses but also to qualified elementary and secondary education expenses. 

Important details about IRAs

  1. An IRA doesn’t require participation from an employer. You can simply open an IRA on your own at any time, with earned income. 
  2. IRAs are subject to contribution caps that are updated annually by the IRS. You can find the current year’s limits at IRS.gov.
  3. For contributions to a Roth IRA, there are income-based caps. If you earn more than the cap, you can’t contribute to a Roth IRA. 
  4. If you or your spouse has access to a 401(k) or another employer-sponsored plan, then you may still contribute to an IRA. It is important to review the rules set by the IRS. 

It is also important to check in on your IRA choices regularly. Just because you want to do a traditional IRA now, doesn’t mean a Roth may not be important to you later on. 

How to get started with an IRA
If you have any questions about opening an IRA at Banner Capital Bank, our knowledgeable bank representatives are here to help. Please reach out to us, and we will help you set up a time to open an account.

We do not offer tax advice. Consult your tax consultant or accountant prior to opening up an IRA account.