Long Term Saving – All about Individual Retirement Accounts


If putting money away for retirement is part of your plan for 2015, you may want to read on. Our love of fiscal responsibility has driven Wallkill Valley Federal Savings & Loan, to help our community work toward achieving their financial goals. We started our discussion a few weeks back by defining the various types of deposit accounts. Today we will focus on saving for retirement, specifically with Individual Retirement Accounts.

What is an IRA?

In case you missed it, in our initial blog we defined IRAs like this: An IRA, or Individual Retirement Account, is an account that comes with significant tax breaks. Your money grows in these types of accounts tax free. An IRA is not a savings account per se. It is a holding basket for your retirement funds. Meaning, you can distribute the money you contribute into your IRA holding basket into CDs, Money Market Accounts, Mutual Funds, Stocks, Annuities or Bonds. How you distribute the funds is up to you and your investment style! There are several different types of IRAs, each with their own set of rules. Below is a list of the basic types of IRAs and a brief description of the rules that apply:

Traditional IRAs

With a traditional IRA, you do not pay taxes until you withdraw the money. Anyone with an income can contribute funds into a traditional IRA. The money grows in the account tax free. With a traditional IRA, you must begin to withdraw the money before you are 701/2.


With a ROTH IRA, you pay taxes when you deposit your money in the account. There are income limits that designate who can contribute to a ROTH IRA (if you make too much money, you will not be able to open one). The money grows in the account tax free. There is more flexibility in regards to withdrawal of the money. You can leave the funds in the account for as long as you like.


These are IRA accounts designed for people who are self-employed or freelancers.

Simple IRAs

A Simple IRA is for a small business owner who has less than 100 employees and has no other retirement plan.

The Good

Repeat after me, tax-free-growth. The interest earned in your IRA account compounds yearly without feeling the pinch of taxes.

The not so Good

There are yearly limits on the amount you can contribute to your IRA. Currently, if you are under 50, you cannot contribute more than $5500/year. The limit you can contribute does however increase as you age.

Still have questions about the various types of IRAs and how they can help you reach your financial goals? Please get in touch with us. Our staff would be happy to review the various types of IRA’s we have available at WVFS&L, answer any questions you may have and help direct you to the right place for your money!