IRAs—Tax-Advantaged Retirement Investing

An Individual Retirement Account (IRA) offers you an opportunity to create a personal investment program for your long-term retirement goals. IRA investing can provide important tax benefits that can help your money grow tax-deferred or tax-free. Setting up an MTB Funds IRA, for example, is easy, affordable** and flexible. You can contribute up to your allowable maximum whenever you want – monthly, quarterly, or in a lump sum, from January 1st of the tax year through to, and including, April 15th of the following year.

Traditional IRA

A Traditional IRA combines the advantages of a possible tax deduction (subject to your income level) with the opportunity for tax-deferred growth potential. When considering contributions to a Traditional IRA it is important to think about your current tax situation and your probable tax bracket upon retirement. Will it be higher than today? A Traditional IRA may afford you a tax deduction against current earned income, but its tax-deferred accumulated growth will be taxed upon removal at the then current tax rate. (Tax rates are subject to change over time.)*

Roth IRA

The Roth IRA presents another tax-advantaged opportunity to invest for retirement. Since contributions to a Roth IRA are made with after-tax dollars, qualified withdrawals made after the account has been open for at least 5 years may be received tax-free*. Eligibility for contributing to a Roth IRA depends on your income level. Depending on your circumstances and objectives, it may be a preferable route over a Traditional IRA.

A Traditional or Roth IRA may be right for you, depending on your unique situation.

SEP and SIMPLE — Easy, cost-effective retirement plans for small business

If you’re a manufacturer, contractor, professional practitioner, or self-employed, a SEP-IRA or SIMPLE IRA can provide you and your employees with an easy and affordable retirement plan. These plans allow your company to make tax-deductible contributions directly to employees’ IRA accounts. As a result, these plans offer simplicity, administrative ease, and cost-effectiveness. Employees are immediately vested and they can withdraw money at any time (subject to taxes and IRS penalties).** These plans may also be as permanent or temporary as you desire.

* Distributions of deductible contributions and earnings from Traditional, SEP, and Simple IRAs are subject to income tax and may be subject to a 10% penalty if made before the age of 59½. Withdrawals from a Roth IRA may be subject to taxes and a 10% IRS penalty unless: (1) the IRA has been open for at least 5 years, and the withdrawal: (1) is made after age 59½. (2) is used to pay certain first-time home purchase expenses (up to $10,000), or (3) made due to the owner’s death or disability.

** Please Note: Distributions of deductible contributions and earnings from Traditional, SEP and Simple IRAs are subject to income tax and may be subject to a 10% penalty if made before the age of 59½. For SIMPLE IRAs this 10% penalty increases to 25% if the employee takes a distribution within two years from the date the employee first participates in the plan.

For more details on SEP and SIMPLE IRAs, please refer to our latest SEP & SIMPLE Information Sheet. Forms and an instruction sheet for setting up each are available upon request.

Our IRA Investing Sheet compares the features and benefits of the Traditional IRA and Roth IRA. However, IRA rules are highly detailed and certain requirements apply to specific situations. Consulting with a qualified tax professional is highly recommended to help you decide which type of IRA and Fund selections may be most appropriate for you.

To learn more about your retirement account options, call 1-800-836-2211.