Clifton Savings Bank

Individual Retirement Accounts (IRAs) and Education Plans

IRAs and Education Plans in General

• $50 minimum opening balance
• $1 minimum balance to earn stated APY
• Terms range from 75 days to 84 months
• Convenient automatic renewal
• FastBanking (24-hour telephone banking)
• Internet Banking

Traditional Individual Retirement Account (IRA)

• Allows individuals to enjoy tax-deferred interest while saving for retirement
• Contributions are tax deductible for individuals who are not active participants in
  qualified retirement plans
• For active qualified plan participants, a tax deduction may be available - based on
  the individual's Modified Adjusted Gross Income (M.A.G.I.)
• Direct Rollover IRA allows an individual to retain tax-deferred status when rolling
  over funds from a pension plan
• Distributions are tax-free and IRS penalty-free for qualifying first-time homebuyers
  and individuals over age 59½
• Minimum required distributions must begin at age 70½

Roth Individual Retirement Account (IRA)

• Eligibility to participate is based on Modified Adjusted Gross Income (M.A.G.I.)
• Distributions are tax-free and IRS penalty-free for qualifying first-time homebuyers
and individuals over age 59½
• No minimum distribution required at age 70½
• The beneficiary may be a child, grandchild or another eligible relative

What's the difference between a Traditional IRA and a Roth IRA?

• A Traditional IRA is the IRA originally chartered by the U.S. government. There are
  two primary benefits of a Traditional IRA. The earnings of the IRA are tax deferred
  until withdrawn. For many taxpayers, the contributions to the IRA are tax deductible.
• A Roth IRA is a more recent form of a retirement savings plan. The principal
  benefit of a Roth IRA is that all earnings will accumulate tax-free. Unlike a traditional
  IRA, contributions cannot be deducted. Contributions can be made to a Roth IRA
  after age 70½, provided the owner has earned income. Qualified Roth IRA
  distributions are tax and penalty free if they meet the following two requirements:

1) The distributions are taken no earlier than five years after the
taxpayer funds his or her first Roth IRA.
2) The distribution is taken as a result of any one of the following:

a. Owner reaches age 59½.
b. Disability of owner.
c. Beneficiary receives the distribution upon owner's death.
d. Owner purchases a first home (subject to a lifetime limit of $10,000).

2009 New Tax Law Maximum Contributions

• $5,000 - Single
• $10,000 - Married Couples Filing Jointly
• $6,000 - Single Taxpayers Age 50 and Over
• $12,000 - Married Taxpayers Both Age 50 and Over
• $2,000 - Education IRA, Per Beneficiary, Per Year

Additional Incentives for 50-Plus Taxpayers

• Individuals who are 50 and older are allowed to make "catch-up" contributions.
These contributions are reflected in the maximum limits shown above.

Coverdell Education Savings Account

• To fund the future cost of a beneficiary's primary and post secondary education
  an eligible school, college or vocational school
• Non-deductible contributions of up to $2,000 annually per designated beneficiary
  under age 18
• Distributions for qualified higher-education expenses, such as tuition, fees, books,
  supplies equipment and the like, are both tax-free and IRS penalty-free
• Contributions must stop when the beneficiary reaches the age of 18, and funds
  must be distributed by age 30
• If funds are not distributed, they can be rolled over into a new Coverdell account for
  the benefit of a different qualifying relative.
• Individuals whose modified adjusted gross income (M.A.G.I.) for the year is less
  than $110,000 ($220,000 in the case of a joint return) may contribute