Understanding IRAs: Your Guide to a Brighter Financial Future

Quinn B. Christensen – Chief Information Officer & HR Officer

At The Peoples Community Bank, we are committed to "Simply Good Banking," and a significant part of that commitment involves empowering you with clear, concise information.  I am here to explain some quick facts on how Individual Retirement Accounts (IRAs) work. 

Traditional vs Roth IRAs: What's the Difference?

Choosing between a Traditional and Roth IRA is like selecting the route that best suits your journey to retirement:

Traditional IRA:

• Pros: Possible tax deduction now, lowering your current taxable income.
• Cons: Future withdrawals are taxed.
• Distributions in Retirement: After reaching the age of 73 (current RMD age for 2023), Required Minimum Distributions (RMDs) are required annually.
• Ideal for: Individuals who anticipate being in a lower tax bracket after retiring.

Roth IRA:

• Pros: Pay taxes now, enjoy tax-free withdrawals later.
• Cons: No immediate tax deduction.
• Distributions in Retirement: No Required Minimum Distributions (RMDs)
• Ideal for: Those expecting to be in a higher tax bracket during retirement.

Contribution Limits: How Much Can You Save?

For both 2023 and 2024, the IRS has set limits on the amount you can contribute to your IRAs. Here are the numbers:

• 2023: $6,500 (or $7,500 if you're 50 or older)
• 2024: $7,000 (or $8,000 if you’re 50 or older)

Planning your contributions within these limits is crucial. We’re here to guide you through these regulations seamlessly.

Deadlines Matter: Don't Miss Out!

To contribute for 2023, you have until April 15, 2024. It's an excellent opportunity to enhance your retirement savings and lessen your 2023 taxable income. Time flies, so don't let this chance slip away!

FDIC Insured IRA CDs: A Safe Choice

We offer FDIC Insured IRA CDs for both Traditional and Roth IRAs. This secure, stable investment avenue ensures the growth of your retirement funds with the added assurance of FDIC protection. A prudent choice for those seeking a reliable investment path.  We offer both fixed rate CDs and Variable Rate CDs.  The Variable Rate option allows you to make future deposits within the term of that CD. 

Takeaway: Start Today for a Brighter Tomorrow

The best time to plan for retirement is now. Whether you opt for a Traditional or Roth IRA, the most crucial step is to begin. Make an appointment with your personal banker and let's discuss how to align your retirement plan with your financial goals. "Simply Good Banking" is more than a tagline—it's our promise to help you pave the way to a secure, fulfilling future.

This blog is for educational purposes only and should not be considered financial advice. Please consult a financial advisor for personalized guidance.