HEALTH SAVINGS ACCOUNTS

Community Bank offers Traditional, Roth IRAs as well as Coverdell Education Savings Accounts.   These are retirement and education savings vehicles established by individual taxpayers.  It’s never too early to save for your future.

A Traditional IRA is an account that allows individuals to direct pretax income, up to specific annual limits, toward investments that can grow tax-deferred.  Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Traditional IRA. Contributions to the Traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status and other factors.

  • Earnings grow tax-deferred
  • Contributions may be tax-deductible
  • Distributions are taxed at ordinary income rates

A  Roth IRA is a retirement plan that bears many similarities to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Similar to other retirement plan accounts, non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal.

  • Earnings grow tax-deferred
  • Contributions are not tax-deductible, but can be removed at any time
  • Qualified distributions are tax-free

Coverdell Education Savings Account is a tax-deferred trust account created by the U.S. government to assist families in funding educational expenses for beneficiaries 18 years old or younger. Contribution per year for any single beneficiary is $2,000.00.

  • Potentially tax-efficient way to contribute up to $2000.00 per year per beneficiary for education expenses
  • CESA distributions are tax free if they are used for qualified education expenses at an eligible educational institution.In 2003, Health Savings Accounts were created to encourage individuals to save for future health care expenses. A health savings account (HSA) offers the advantages of tax deductible contributions and tax free distributions used for the payment of qualified medical expenses. Not everyone is eligible to have a health savings account, however. An individual must be enrolled in a high deductible health insurance plan (HDHP) in order to qualify for a health savings account.

    Health savings accounts provide:

    • More affordable health insurance policies
    • Tax-deductible deposits
    • Tax-deferred growth
    • Tax-free distributions

    Health savings accounts enable you to take control of your own health care decisions. They help you to save money on insurance premiums and on income taxes. Ask a representative for more information on setting up your Health Savings Account.

    Requirements

    No minimum deposit to open.

    You must be:

    • Covered by qualified high deductible health insurance plan (HDHP)
    • Not covered under other health insurance that is not a HDHP
    • Not enrolled in Medicare
    • Not another person’s dependent


    Costs

    No fees associated with a Health Savings Account

    Benefits

    • Contributions remain in your account year after year until you use them
    • Contributions are tax-deductible
    • Withdrawals to pay for qualified medical expenses are not taxed
    • Earnings accumulate tax-deferred, and if used to pay qualified medical expenses, are tax-free
    • Unused money in your HSA is yours to keep and continues to grow tax-deferred
    • Community Bank offers a HSA debit card to make paying for expenses more convenient