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The Tax Advantages of Contributing to an IRA

Tax Advantages of an IRA

This article should not be considered tax advice. You should seek advice from your tax accountant, CPA or financial advisor.

Have you considered the tax advantages of contributing to an Individual Retirement Account?

My spouse is self-employed, and our tax accountant advised us to consider making an IRA contribution to reduce the amount of taxes due.

We planned to file our taxes early in the year and made the commitment to make the contribution with our return. For us, not only was the amount of our taxes owed reduced, we also received a small refund! This is not the case in every situation, so you should always consult a tax professional before contributing.

Another benefit of Traditional IRA is that you pay no taxes on the growth of your contributed funds, if they remain in the account.

Many people ask, what is the difference between a traditional IRA and a Roth IRA?

For a Traditional IRA, you can make contributions until the year in which you turn age 70 ½. The limit on Traditional IRA contributions for the 2018 tax year is $5,500 for individuals under age 50, and $6,500 for those who are age 50 or older.

In contrast, Roth IRAs don’t have age restrictions, but they do have income eligibility restrictions.

Traditional and Roth IRA contribution limit will go up by $500 for 2019.

Utilizing your tax refund is an easy way to fund an IRA. But, keep in mind, if you would like to make a prior year contribution for the 2018 tax year, it must be made by April 15, 2019.

To find out more about more about Individual Retirement Accounts offered by First Southern National Bank and how to open one, visit https://www.fsnb.net/Personal_Banking/CDs_Retirement


Mary Nita Thompson
Senior Vice President / Chief Operations Officer

(606) 365-4330 Ext: 19515
Email: mnthompson@fsnb.net