A traditional IRA is a savings plan designed to help you save for retirement that provides the benefits of tax-deferred interest and, in many cases, tax deductibility.

With this kind of IRA, you may defer taxes on your contributions until you withdraw the funds.

If you are under age 70½, you may be eligible to establish an IRA, even if you participate in another government plan. You may be able to contribute up to 100% of your compensation or $5,000, whichever is less, and you may get a tax deduction for your contribution.

These extra benefits give your IRA account added value: 

• No commissions or fees* to open
• No annual fees*
• Safety of the combination of FDIC and DIF insurance*
• Access to account information with Telephone Banking*

*Applies to funds invested in Berkshire Bank accounts

Catch-Up Contribution
If you are 50 years of age or older, you may contribute an additional $1,000 "catch-up" contribution for a total annual contribution of $6,000.

Roth Conversions

A conversion provides the means for a Traditional IRA owner to move his/her IRA assets into a Roth IRA in order to take advantage of the possible tax-free and penalty-free benefits that are not available in a Traditional IRA.  Previously, income limitations prohibited many IRA owners from converting their IRA assets into a Roth IRA.  Effective January 1, 2010, the income limitations have been removed, making conversions available to everyone.

Converting assets from a Traditional IRA to a Roth IRA is a taxable event, since assets are being moved from a pre-tax investment to an after-tax investment. 

Individual circumstances and future assumptions will determine whether a conversion might be beneficial.  An IRA owner should always consult his/her tax or legal professional for help in making the right decision.