Question #1: What is the minimum deposit amount I need to open an IRA account at Somerset Trust?
Answer: Open an IRA with as little as $25.00 when invested in the Savings IRA or the 18 Month Variable Rate IRA CD.
Question #2: Can an IRA ever be opened as a joint account?
Answer: No, an IRA is exactly what it says, an “Individual” Retirement Account with just one Social Security number linked to the account. The IRA owner can choose specific individuals to be the beneficiaries of the IRA but no other owners are permitted on the account.
Question #3: Can I make regular deposits into my IRA throughout the year? And can I have it automatically debited from my Somerset Trust checking or savings?
Answer: Yes, you can make regular deposits into your IRA.
Different IRA CD’s require certain minimum deposit amounts.
IRA Certificate of Deposit
Minimum Deposit Amount
These deposits can be set up to automatically come out of a Somerset Trust checking or savings at any time. (EX: $100 bi-weekly or $500 quarterly or $2,000 annually).
18 Month Variable Rate CD
18 Month Fixed Rate CD
30 Month Fixed Rate CD
42 Month Fixed Rate CD
Question #4: Do I have to come into the bank each time I want to make a deposit, withdrawal or renew my IRA?
Answer: Most IRA transactions can be handled over the telephone and this may require the IRA owner to sign specific IRA documents. Normally, IRA documents can be sent through the mail to be signed and returned to our office. There are some instances where it is necessary for the IRA owner to come into the bank to sign paperwork.
Question #5: Are there any fees involved to open or maintain an IRA account at Somerset Trust?
Answer: There are no fees incurred to open or maintain an IRA account at Somerset Trust Co. when the IRA is invested in an IRA Certificate of Deposit account.
Question #6: At what age does the IRS say I must start taking money out of my IRA?
Answer: At age 70 ½ , the Traditional IRA owner must begin distributions. The minimum annual distribution is based on the life expectancy of the participant. With the ROTH IRA there are no required minimum distribution rules.
A qualified distribution from either the traditional or ROTH IRA can be taken before age 59 ½ due to disability, death, qualified higher education expenses, a first time home purchase and certain medical expenses and also medical insurance premiums during periods of unemployment.
Question #7: How will my IRA distributions be taxed when I start making withdrawals from my IRA?
Answer: Money withdrawn from a Traditional IRA is included in gross income in the tax year received. Distributions from an IRA are taxed as ordinary income and not subject to IRS penalties after age 59 ½.
A distribution from a ROTH IRA may be taken tax free and penalty free for qualified distributions. A qualified distribution is a distribution that satisfies the five-year waiting period and the attained age of 59 ½.
Question #8: Can federal income tax be withheld from my IRA distributions?
Answer: Yes, Somerset Trust can withhold whatever percentage or specific amount from an IRA distribution that the IRA owner desires to be withheld.
Question #9: When do the rates change at Somerset Trust on the IRA CDs?
Answer: Rates at Somerset Trust Company are reviewed and updated on Wednesday of each week, unless there’s a holiday during that week, then the rates will update on Thursday.
Question #10: How old must I be to start using my IRA money without being penalized by the IRS?
Answer: On a Traditional IRA, the IRA owner between the age of 59 ½ and 70 ½ may withdraw all, any part, or none of his/her IRA at the IRA owner's discretion without penalty.
Withdrawals taken from a ROTH IRA are allowable as long as the funds have remained in the account for five (5) years and the ROTH account owner has reached age 59 ½. ROTH distributions taken before satisfying the five year and 59 ½ rule, may be subject to income and excise tax.
Question #11: Does Somerset Trust open Education IRAs and how much can be deposited into the account annually?
Answer: Yes. We offer the Coverdell Education Savings accounts. They are an IRA-like savings account created for the purpose of paying qualified higher education expenses for the designated beneficiary. The annual maximum contribution is $2,000 per tax year per beneficiary. No tax deduction is allowed for the contribution, but income tax is deferred on the earnings.
Question #12: What are the tax advantages of opening a Roth IRA versus a Traditional IRA account?
Answer: A Traditional IRA is fully deductible on your federal income tax return for individuals not participating in a Qualified Retirement Plan (ex: 401K). If you are an active participant in an employer sponsored retirement account, there are certain income guidelines you need to follow for single or married couples filing jointly. Distributions taken from a Traditional IRA are taxable as ordinary income. There’s no tax deduction for a ROTH IRA, but distributions will be totally tax free if held in the account for at least five (5) years and the account owner has reached age 59 1/2. The active participation rules in an employer sponsored retirement account do not apply to the ROTH IRA.
Question #13: How much money can I deposit into my Traditional IRA or my Roth IRA (or both IRA’s) annually?
Answer: Contributions per individual to either a Traditional and/or Roth IRA for tax year 2011 or 2012 is the lesser of $5,000 (plus any catch-up contributions for either tax year*, if eligible) or 100% of earned income.

*Catch-up contributions allow individual who are age 50 and older to make additional contributions up to $1,000 per year to their Traditional and/or Roth IRA for 2011 and 2012.