Individual Retirement Account (IRA)

IRA FAQs

• What are individual retirement accounts?

  Individual Retirement Accounts (IRAs) are designed to help you plan for your retirement. They are technically a type of savings plan, but designed to offer significant tax benefits that save you the most money for when you're ready to retire.

• When can withdrawals be made?

  You can generally withdraw funds from an IRA at any time. However, withdrawals made before age 59½ may be subject to a 10% early withdrawal penalty, unless an exception applies. Exceptions may include:

  • Reaching age 59½

  • Death or permanent disability

  • Certain withdrawals by beneficiaries of a deceased IRA owner

  • Qualified military reservist distributions

  • Certain unreimbursed medical expenses

  • Qualified first-time home purchase expenses (up to $10,000)

  • Qualified higher-education expenses

  • Certain substantially equal periodic payments

  For Roth IRAs, contributions can generally be withdrawn at any time without tax or penalty. Withdrawals of earnings may be subject to taxes and penalties if the Roth IRA has not met the applicable five-year rule and another qualifying exception does not apply.

  
  

  Note:  For Roth IRAs earning withdrawals cannot be taken without penalty until at least 5 years from the year of the first contribution or conversion.

• Are withdrawals mandatory?

  Yes. Beginning at age 72 (or 73 if you turned 72 after December 31, 2022) withdrawals will be required for Traditional IRAs. There is no requirement for Roth IRA withdrawals. Inherited IRAs of all types have withdrawal requirements.
  
  
  

• Do I pay taxes on withdrawals?

  Yes. Any withdrawals (not including nondeductible contributions) will have regular income taxes and possible penalties if qualifying conditions are not met. There are no taxes or penalties on qualified direct rollovers.

• Am I qualified for a Horizon Bank rollover IRA?

  Almost anyone with a qualified employer plan distribution can invest funds into a Rollover IRA. (Exceptions include: mandatory distributions, required minimum distributions, distributions on amounts that exceed limits, non-spousal death benefit distributions, hardship withdrawals and outstanding loan balances.)

• What are the tax advantages of an IRA rollover?

  Contributions when rolled over remain tax-deferred as well as any additional earnings to the account.
  

• Are there limits on rollover IRA contributions?

  There is no limit on the amount you can roll over into a Rollover IRA. Rollover funds do not count toward annual IRA contribution limits.

  Any new contributions made after the rollover follow the standard IRA rules. For the 2026 tax year:

  • You may contribute up to $7,500 if you are under age 50

  • You may contribute up to $8,600 if you are age 50 or older
    
    

  For Roth IRAs, contribution eligibility is subject to income (MAGI) limits, which may reduce or eliminate how much you can contribute.  However, there is no income limit on converting funds to a Roth IRA, though the converted amount may be taxable.

  Note: IRS rules apply to timing and frequency of rollovers, including deadlines for completing a rollover and limits on certain types of transfers.

• Is there a deadline for account opening & contributions on a rollover IRA?

  Rollovers can be opened anytime as long as it is within 60 days of the distribution of assets from your employer-sponsored plan only once per year.

• What are my investment options with a rollover IRA?

  Horizon Bank offers both FDIC insured options such as Certificates of Deposit and non-FDIC options, including stocks and mutual funds, through Horizon Private Wealth Management.

• What if I have an employer-sponsored retirement plan?

  Horizon Bank has a variety of options to work around or supplement employer-sponsored plans. We often find that you can save additional money in conjunction with these plans, and together we can figure out exactly how much more you can save.