Individual Retirement Account

Less taxes now, more retirement later.

Many financial experts estimate that you may need up to 85% of your pre-retirement income in retirement. An employer-sponsored savings plan, such as a 401(k), might not be enough to accumulate the savings you need. Fortunately, you can contribute to both a 401(k) and an IRA.

An Individual Retirement Account (IRA) allows an individual to save for retirement with either tax-free growth or growth on a tax-deferred basis.

IRAs are easy to establish. Your Hatboro Federal IRA is maintained in a Certificate of Deposit (CD).

TRADITIONAL IRA

With a Traditional IRA, you can contribute up to $7,000 per tax year, or up to $8,000 per year if you are 50 years or older up to the amount of taxable compensation(1).

  • Your contributions may be tax-deductible and earnings grow tax-deferred until you withdraw the funds.
  • If you or your spouse are covered by a retirement plan at work, your traditional IRA contribution may be entitled to a full, partial, or no deduction depending on your modified adjusted gross income (MAGI). Check with your tax advisor.
  • Withdrawals must begin when you reach age 73. (2)
  • Distribution under the age of 59 1/2 may be subject to a 10% tax penalty.
  • Early distributions for qualified higher education expenses and/or expenses of qualified first time homebuyers (3), up to $10,000, are exempt from additional IRS tax penalties.

ROTH IRA

With a Roth IRA, you can contribute up to $7,000 per tax year, or up to $8,000 per year if you are 50 years or older up to the amount of taxable compensation (1).

Contributions are not tax-deductible. However, earnings grow tax-free and distributions are generally tax-free in the year received provided certain requirements are met.

The account offers a number of benefits:

  • Early distributions for qualified higher education expenses and/or expenses of qualified first time homebuyers (3), up to $10,000, are exempt from additional IRS tax penalties.
  • Withdrawals are tax-free after age 59 1/2, or in the event of death or disability.
  • Distributions under the age of 59 1/2 may be subject to a 10% tax penalty.
  • Your eligibility to make a Roth IRA contribution may be phased out based on your filing status and your modified adjusted gross income (MAGI). Check with your tax advisor.
  • You can contribute to a Roth IRA even if you are participating in an employer-sponsored plan.

For more information about any Hatboro Federal IRA, contact Kim Karczewski in our Hatboro office at 215.675.4000.

(1) For the 2024 tax year.

(2) If you are 70 ½ years old prior to 2020, required distributions begin at 70 ½ years of age.  For IRA owners born on or after July 1, 1949, and before January 1, 1951, the year in which the IRA owner attains age 72 is their first distribution calendar year.  Due to changes made to the SECURE 2.0 Act of 2022, IRA owners born on or after January 1, 1951, and before January 1, 1960, the year in which the IRA owner attains age 73 is their first distribution year.  For IRA owners born on or after January 1, 1960, the year in which the IRA owner attains age 75 is their first distribution calendar year.

(3) As defined by IRS regulations.

NOTE: All IRAs are subject to the terms and conditions established by the Internal Revenue Service.  Please consult your tax advisor with any questions on how the IRA rules apply to your personal situation.

Each depositor is insured to at least $250,000 by the FDIC.  For more information, go to http://www.fdic.gov.