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Retirement and Education Savings

Many consumers today look to their bank for help saving for retirement and their children's educations. At FNCB Bank, we offer a range of savings accounts specifically designed to help you in these areas.

 

Retirement and Education Savings Accounts Comparison Chart

Use the chart below to compare the different retirement, health and education savings accounts offered by FNCB Bank side by side.

Type of Account

Key Features

Compare Accounts

Traditional IRA

If you have earned income and are under the age of 70 1/2, then this plan could be for you. Contributions may be fully federal income tax deductible if the individual is not an active participant in an employer sponsored plan.

Roth IRA

Are you limited to making non-deductible contributions to a traditional IRA? If yes, then open this account today!

Rollover IRA

If you are changing jobs or about to retire, then you should consider this account.

Simplified Employee Pension Plan (SEP)

If you are a small business owner and want to offer a retirement plan to your employees, then you should consider this plan.

Coverdell Education Savings (CESA)

This account is perfect for parents who want to assist their children with their education expenses.

Traditional IRA

Not only is the money you earn tax-deferred until you begin making withdrawals, but you might also qualify for a current tax deduction. Please consult your tax advisor before making any financial decisions.

Benefits

  • Earnings are tax-deferred until withdrawn after 59½ when they will be taxed at your current tax rate.
  • Contributions may be tax-deductible.

Eligibility

You can set up and make contributions to a Traditional IRA if:

  • You (or, if you file a joint return, your spouse) received taxable compensation during the year, and
  • You must be under the age of 70 ½ during the entire year in order to contribute

You can have a Traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan.

Investments

FNCB Bank IRA funds are invested in Certificates of Deposit.

Withdrawals

  • You must start taking a minimum withdrawal when you reach the age of 70½.
  • A withdrawal cannot be made before the age 59½ without incurring penalties and tax liabilities.
  • Traditional IRAs are tax-deferred, which means you don't pay federal income taxes on any gains until you begin to take withdrawals from the account.

Roth IRA - No minimum distribution requirement

This retirement savings account offers tax-deferred growth and tax-free withdrawals in retirement. It really is the best of both worlds! Please consult your tax advisor before making any financial decisions.

Benefits

  • Qualified withdrawals of earnings are tax-free and IRS penalty free after a five-year holding period.
  • Withdrawals of Roth contributions are tax-free and IRS penalty free at any time.
  • There is no mandatory age 70½ minimum distribution requirement.
  • Your beneficiaries can receive tax-free distributions.

Eligibility

You can set up and make contributions to a Roth IRA for 2019 if you received taxable compensation during the year and your modified adjusted gross income (MAGI) meets the following limitations:

  • Full contribution if MAGI is less than $122,000 (single) or $193,000 (joint)
  • Partial contribution if MAGI is less than $137,000 (single) or $203,000 (joint)

To learn more about eligibility requirements, read IRS Publication 590 or consult your tax advisor.

IRA Investments

FNCB Bank Roth IRA funds are invested in Certificates of Deposit.

Withdrawals

Once a five-year holding period is met, any earnings withdrawn for a qualified distribution are tax-free and IRS penalty free. Qualified distributions include:

  • Distributions made on or after the date on which the customer attains age 59½.
  • Distributions made to a beneficiary upon account holder's death.
  • Distributions attributable to the owner being permanently disabled.
  • Qualified first time homebuyer distributions up to $10,000 (lifetime limit).

Rollovers

A Rollover between Traditional IRAs or between Roth IRAs is a tax-free movement of money between like IRAs. Rollovers can be performed for a variety of personal reasons but are limited to the 60 day rule which states there can only be one rollover in a 12 month period. If you recently changed jobs or will be changing jobs soon, you can rollover your IRAs to consolidate retirement funds from your previous employer and protect them from taxes and penalties. Please consult your tax advisor before making any financial decisions.

Benefits

  • Keeps your retirement funds tax-deferred and protected from taxes and penalties.
  • Convenient access to your money when you start taking distributions at retirement.

Direct Rollover

This type of rollover is generally from an employer sponsored plan. The check from your qualified employer plan assets is made out to the financial institution where you have chosen to place your IRA funds for "the benefit of you". Since the funds are deposited directly from the qualified employer plan to the IRA, no taxes are withheld.

Indirect Rollover

The check from your qualified employer plan assets is made payable to you. Your former employer must withhold a mandatory 20% for taxes. You have 60 days to deposit the funds into a new IRA and you are required to make up that percentage from your own personal funds. If you do not make up the 20% on deposit, the 20% withheld is considered a taxable distribution and only 80% will continue to earn interest tax-free. Additionally, if you are under age 59½, you are subject to an additional early withdrawal penalty of 10%.

IRA Investments

FNCB Bank IRA funds are invested in Certificates of Deposit.

Simplified Employee Pension Plan (SEP)

This is a great retirement savings account for small business owners and self-employed individuals. It's easy and inexpensive to set up and also offers tax advantages. Please consult your tax advisor before making any financial decisions.

Benefits

  • Contributions to a SEP are tax deductible and your business pays no taxes on the earnings on the investments.
  • The employer is not locked into making contributions every year. In fact, you decide each year whether, and how much, to contribute to your employees' SEP-IRAs.
  • Generally, you do not have to file any documents with the government.
  • You may be eligible for a tax credit of up to $500 per year for each of the first 3 years for the cost of starting the plan.

Eligibility

An eligible employee is an employee who:

  • Is at least 21 years of age, and
  • Has performed service for you in at least 3 of the last 5 years.

Once an employee meets the eligibility requirements, they cannot be excluded from the plan.

IRA Investments

FNCB Banl SEP funds are invested in Certificates of Deposit.

Withdrawals

  • Participants cannot take loans from their SEP-IRA
  • Participants can make withdrawals at any time, to be rolled over tax-free to another SEP-IRA, to another traditional IRA, or to another employer's qualified retirement plan.
  • Funds withdrawn from a SEP-IRA (and not rolled over to another plan) are subject to income tax for the year in which an employee receives a distribution. If you are under 59½, additional taxes may apply.
  • Participants must start taking a minimum withdrawal when they reach the age of 70½.

Coverdell Education Savings (CESA)

This account is a great way to get a jumpstart on saving for your children's college educations. The money you contribute grows tax-free until withdrawn for qualified education expenses. Please consult your tax advisor before making any financial decisions.

Benefits

  • Funds deposited in the account grow tax free until distributed.
  • There is no limit on the number of separate Coverdell ESAs that can be established for a designated beneficiary. However, the total contributions for the beneficiary in any year cannot exceed $2,000.
  • The designated beneficiary can be changed to a member of the beneficiary's family. There are no tax consequences if, at the time of the change, the new beneficiary is under age 30.

Eligibility

You can set up and make contributions to a Coverdell Education Savings Account if:

  • Your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return).
  • The designated beneficiary must be under age 18 when the account is established and when the contribution is made.
  • Contributions must be made in cash.

IRA Investments

FNCB Bank CESA funds are invested in Certificates of Deposit.

Withdrawals

  • Distributions can be taken at any time.
  • Distributions are tax-free as long as the distributions do not exceed the beneficiary's adjusted qualified education expenses for the year.

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