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IRAs: The Basics

An individual retirement account (IRA) allows you to save money for retirement in a tax-friendly way. Most people don’t start thinking about retirement until they’re close to that age. It’s hard to imagine saving for retirement when you’re just trying to get by. Between student loan debt and the cost of living, most Millennials don’t have the luxury to plan for retirement. However, if you are not saving for retirement now, you are missing out on major opportunities to boost your nest egg into a massive retirement reserve. So, if your goal is to retire on time and you want a financially secure future, then it’s time to start saving.

Here’s what you should know:

IRAs gain interest each year without taxes nipping away at it. In addition, you can control how the tax on retirement income is paid. Taxes can be paid either on the money you put into the plan initially or on the money you withdraw in retirement, depending upon whether you choose a traditional or Roth IRA.

Favorable changes to the IRA contribution rules have made starting a plan even better. In 2019, you can contribute up to $6,000 in a traditional IRA. It’s as simple as saving your macchiato money instead of splurging on expensive coffee every day. If you begin early enough, you only need to invest relatively small amounts to reach a sizable balance. According to, your $1 could be worth almost $6 by the age of retirement if you start planning and saving in your 20s.

There are different types of IRAs, here are a few highlights of each:

Traditional IRA: An investment retirement account in which an individual makes tax deductible contributions up to a certain limit throughout his/her working life.


  • Immediate tax break advantage (taxes are paid later through distributions
  • Bankruptcy protection
  • You can pass assets onto beneficiaries after death

Roth IRA:  An investment retirement account in which the individual makes contributions with money you’ve already paid taxes on.


  • Tax-free income in retirement
  • Contribution available beyond age 70 ½
  • Zero required minimum distributions after age 70 ½ 
  • Your beneficiaries receive your assets, tax-free

Experts have said individuals less than age 50 may find the Roth IRA more advantageous as they have more time for the earnings to grow tax free.  Having the ability to control taxes during retirement can be a huge financial planning tool! Further, a Roth IRA provides the ability to use the money prior to retirement if necessary, as the first dollars coming out per ordering rules, are your own contributions which are not taxed or possibly penalized. However, there are some limitations to Roth IRA contributions, and these rules can change. Always consider talking to a tax advisor about any questions you may have about your IRA contributions.

If you’re still not sure which plan is right for you or whether you should start an IRA now, we’d love to help. Contact Jim Spaniol at Falcon National Bank.

Jim Spaniol

Business Development Manager




  • Duke | Apr 4th 2019 @ 4:07 PM

    Can a bank Certificate of Deposit be set up as either an IRA or a ROTH IRA ?

  • Falcon National Bank | Apr 5th 2019 @ 12:16 PM

    Great question, Duke! Yes, Certificate of Deposits are a very common investment for both a Roth and Traditional IRAs. It is secure and not subject to market fluctuations. For more information on our Rates please contact Jim Spaniol at Falcon Bank: 320.223.6307.

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