Personal – Certificates of Deposits

 
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Invest & Retire Center

CD

Certificates of Deposit offer low-risk investment opportunities and higher interest rates by locking in your deposits for a specified period of time.

This is a single-deposit account and the interest rate is fixed at the date of deposit for the term of the account. Interest earned can be credited back into the account, or transferred monthly or quarterly to another Park State Bank & Trust account, or paid by check. CDs range in terms from 3 to 60 months.

Jumbo CDs have a starting balance of at least $100,000 and earn a higher rate of interest with terms ranging from 1 – 12 months.

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Investing Basics

Traditional IRA

An Individual Retirement Account (IRA) is a savings plan that allows you to defer taxes on the interest you earn until retirement age. In many cases, the money you contribute is tax-deductible.

  • Who is eligible for a Traditional IRA?
    Anyone with earned income may open or add to a Traditional IRA up to age 70 1/2. There is no minimum age requirement as long as the IRA contribution comes from earned income.
  • What is a Spousal IRA?
    A Spousal IRA is designed to allow a married person to make an IRA contribution for their spouse who may not have earned income.
  • What amount is tax-deductible?
    The amount that is tax-deductible varies depending on marital status, income, and whether you have a retirement plan at work. Please review the guidelines in this brochure or consult your tax advisor to determine how much of your IRA contribution is tax-deductible.
  • When may funds be withdrawn?
    You may withdraw funds when you reach 59 1/2 years of age. Because withdrawals are taxed as ordinary income, some people prefer the tax advantage of taking withdrawals in installments. However, you may withdraw the entire amount in one lump sum.
  • When must funds be withdrawn?
    The year in which you turn 70 1/2, you must begin to take required minimum distributions (RMDs) or tax penalties will be imposed.
  • Are there penalties for early withdrawals?
    If you withdraw funds before age 59 1/2, there is a 10% early distribution penalty unless you qualify for an exemption. Exemptions are allowed for disability, qualified medical expenses, qualified education expenses, qualified first time home purchase, qualified health insurance expenses, or death. The bank may impose an early withdrawal penalty depending on the type of account.

Roth IRA

A Roth IRA is funded with after-tax dollars. Although contributions are not tax-deductible, distributions, including earnings, are income tax-free and IRS penalty-free when taken for qualified reasons.

  • Who is eligible to contribute to a Roth IRA?
    Individuals whose income does not exceed the modified adjusted gross income (MAGI) limits may contribute to a Roth IRA. The MAGI is derived by taking your adjusted gross income figure and adding certain deductions or adjustments to this number on your federal tax return.
  • What is a Spousal IRA?
    A Spousal IRA is designated to allow a married person to make an IRA contribution for their spouse who may not have earned income.
  • Are there penalties for early withdrawal?
    Withdrawals of earnings for reasons are subject to taxation and a 10% IRS penalty on the amount withdrawn. The IRS penalty may be waived for these exceptions:

    • Substantially equal periodic payments
    • Eligible medical expenses
    • Medical insurance premiums for eligible unemployed individuals
    • Qualified education expense
  • When may funds be withdrawn from a Roth IRA?
    Withdrawals of earnings are income tax-free and IRS penalty-free if you satisfy two conditions. First, the plan must have been opened for at least five years, and second, the withdrawal must be made for one of the following reasons:

    • Qualified first-time home purchase
    • You attain age 59 1/2
    • Death
    • Disability
  • When must funds be withdrawn?
    Unlike the traditional IRA, the Roth IRA does not require you to withdraw funds at age 70 1/2. There are special requirements when these plans pass to beneficiaries.

Coverdell ESA

An ESA (Education Savings Accounts) is an investment tool designed to pay for a child’s education. The plan allows total contributions of $2,000 per year for each child until the age of 18, or older if the child has special needs.

The contributions are not tax-deductible, but the interest earned and subsequent withdrawals are income tax free and IRS penalty-free when used for qualified educational expenses, including tuition, fees, books, supplies, and equipment.

  • Who may contribute to Coverdell Education Savings Accounts?
    Almost anyone may contribute including parents, grandparents, other relatives, even friends.
  • How much may be contributed to Coverdell Education Savings Accounts?
    There are two key limitations:

    • Each child can receive a total of $2,000 per year from all contributors combined. Contributions may be made to a single account or to multiple accounts benefiting the same child, but the total cannot exceed $2,000 per child.
    • The amount that may be contributed is reduced if the Modified Adjusted Gross Income (MAGI) is over $95,000 for an individual tax return filer, or over $190,000 for joint filers. No contribution is allowed for single filers with MAGI over $110,000 and joint filers with MAGI over $220,000.
  • How do I open a Coverdell Education Savings Account?
    At this time, IRA accounts can only be opened at our branch locations.