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Individual Retirement Accounts

An IRA is a special savings account for your retirement, but with special tax benefits. There are two types of IRAs:

  • Traditional IRA – Deduct now, pay taxes later.
    With a traditional IRA, you contribute pre-tax funds. This not only provides savings for your future but can significantly lower your tax bill this year.
  • Roth IRA – Pay taxes now, withdrawal tax-free later.
    With a Roth IRA, you contribute after-tax funds. But since you’ve already paid taxes on these funds, your future withdrawals, including earnings, are generally tax-free.

Which one is right for me?

Which IRA is best depends on your individual needs. In general, if you expect to be in a higher tax bracket in the future, then a Roth is better. If you expect to be in the same or lower tax bracket, then a traditional is better. Having both kinds of IRAs is the safest method to plan for any eventuality in your future.

Traditional IRAs

You can contribute to a Traditional IRA if you have received taxable income during the year.  Taxable income includes things such as wages, salaries, tips, and bonuses. You can open a Traditional IRA any time of the year. Contributions must be made by your tax return due date (typically April 15).  Money invested in a Traditional IRA is pre-tax money meaning that contributions and interest earned is deferred until the money is withdrawn. If you are under 50 years of age, the limit for contributions is $6,500 for 2023 and $7,000 for 2024. If you are age 50 or older, the contribution limit is $7,500 for 2023 and $8,000 for 2024. This limit can change from year to year.

Roth IRAs

You can contribute to a Roth IRA if you have received taxable compensation and meet other income requirements. You can open a Roth IRA any time. Contributions must be made by your tax return due date (typically April 15). Contributions can be made regardless of your age. If you are under 50 years of age, the limit for contributions is $6,500 in 2023 and $7,000 for 2024. If you are age 50 or older, the contribution limit is $7,500 in 2023 and $8,000 for 2024. This limit can change from year to year. Roth IRA contributions cannot be deducted. Qualified distributions are tax-free.

Withdrawing your money

You can withdraw money from an IRA anytime, but you may avoid penalties and additional taxes if you don’t do it too early.

Withdrawals before age 59 ½

Traditional IRA
Withdrawals will result in a 10% penalty tax plus regular income tax on the entire withdrawal.

Roth IRA
If your withdrawal exceeds more than you’ve contributed in total, you could be subject to both taxes and penalties on the earnings portion of your withdrawal.

Withdrawals between ages 59 ½ and 73

Traditional IRA
You’ll owe taxes on the withdrawals of all earnings plus any contributions you originally deducted from your taxes.

Roth IRA
Typically, withdrawals are not subject to penalties and if your Roth IRA has been open for at least 5 years1 you’ll pay no taxes on withdrawals either.

1 The IRS treats a Roth IRA withdrawal made more than five years after the first tax year in which you made a contribution (including earnings) as a “qualified distribution.” This means it is not taxable or subject to a penalty as long as you satisfy one of these qualifying conditions: You’re at least 59½, you become disabled or pass away, or you use the withdrawal (up to a $10,000 lifetime maximum) to pay for a first-time home purchase. 

Withdrawals after age 73

Traditional IRA
You must take your first required minimum distribution by April 1st of the year following the year you reach age 73 and by December 31st each year thereafter.

Roth IRA
There is no mandatory withdrawal at any age.

Additional Traditional IRA Options


A SEP IRA is a type of traditional IRA for self-employed individuals or small business owners. (SEP stands for Simplified Employee Pension.) Any business owner with one or more employees, or anyone with freelance income, can open a SEP IRA. Contributions, which are tax-deductible for the business or individual, go into a traditional IRA held in the employee’s name. Employees of the business cannot contribute – the employer does. Like a traditional IRA, the money in a SEP IRA is not taxable until withdrawal.


A SIMPLE IRA is a type of traditional IRA that may be established by employers, including self-employed individuals (sole proprietorships and partnerships). The SIMPLE IRA allows eligible employees to contribute part of their pretax compensation to the plan. This means the tax on the money is deferred until it is distributed.


FCN Bank IRA investment options:


  • An initial investment of at least $500
  • CD IRA terms vary from 6 months to 5 years



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