What is an IRA?

Your retirement may still be many years away but it is never too early to start planning for it. Whether you wish to have the features of tax - deductible contributions or withdrawals, First National Bank has the right IRA for you.

A Traditional IRA allows you to defer taxes on the earnings on your contributions until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which you make them.

A Roth IRA allows only nondeductible contributions and features tax-free withdrawals for certain distribution reasons after a five-year holding period. Since Roth IRA contributions are nondeductible and taxed in the year they are earned, if you expect to be in a higher tax bracket when you retire, you may benefit more from a Roth IRA than from a traditional IRA.

A Coverdell Education Savings Account (CESA) is a nondeductible account that features tax-free withdrawals for a very specific purpose-a child’s education expenses. While similar to a Traditional or Roth IRA in that distributions are permitted for higher education, CESA plans have the added benefit that qualified higher education distributions are not only penalty tax free, but also federal income tax free.