Individual Retirement Accounts

Traditional IRA

A Traditional IRA allows you to defer taxes on the earnings on your contributions until they are withdrawn. Also, certain contributions are tax deductible in the tax year for which they are made. If you are younger than age 70½ for the entire tax year and have earned income (or your spouse has earned income), you are eligible to establish a Traditional IRA.

Traditional IRAs at Ladysmith Federal earn 0.25% higher interest than our CDs for the same term.

Roth IRA

A Roth IRA allows only nondeductible contributions and features tax-free withdrawals for certain distribution reasons after a 5-year holding period. Since Roth IRA contributions are nondeductible and taxed in the year they are earned, if you expect to be in a higher tax bracket when you retire, you may benefit more from a Roth IRA than from a Traditional IRA.

There are two requirements for eligibility to contribute to a Roth IRA:

1. You or your spouse must have earned income
2. Your modified adjusted gross income (MAGI) cannot exceed certain prescribed limits.

Roth IRAs at Ladysmith Federal earn 0.25% higher interest than our CDs for the same term.

Coverdell Education Savings Account

A Coverdell Education Savings Account (ESA) is exactly what it sounds like — a savings arrangement in which contributions are invested for the purpose of funding an individual’s education. Eligible taxpayers may deposit up to $2,000 per year into a Coverdell ESA for a child under the age of 18.

Amounts deposited in the account grow tax free until distributed, and the child will not owe tax on any withdrawal from the account if the qualified education expenses at an eligible educational institution for the year equal or exceed the amount of the withdrawal.

ESAs at Ladysmith Federal earn 0.25% higher interest than our CDs for the same term.