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Investment Insights by Community Financial Services Group - Winter 2019
By Shellie Wright, CTFA, VP & Trust Officer, Community Financial Services Group, LLC

The new year brings new and increased retirement account contribution limits. Retirement plans such as an employer-sponsored plan or your Individual Retirement Account offer tremendous tax advantages and, as important, a way to save for your dream of retirement.

Most individuals can now save up to $6,000 in 2019 in their Individual Retirement Account (IRA). People age 50+ can contribute up to $7,000 to an IRA. These limits apply to either a Traditional “pre-tax” IRA or a Roth IRA, or a combination of the two up to the limit as long as you have earned income at least equal to the contribution amount. Tax deductions for Traditional IRA contributions could be limited if your employer offers a retirement plan and your adjusted gross income exceeds certain levels. Likewise, contributions to Roth IRAs may be limited for individuals with higher incomes. In either case, it would be wise to consult with your tax advisor before making any IRA contributions.

Traditional retirement accounts offer a great way to reduce your income taxes and defer taxation on investment returns for many years. Roth retirement accounts usually completely avoid taxation of investment returns, though contributions to Roth accounts do not reduce taxes on current income.

If your employer offers a retirement plan, such as a 401(k) or 403(b), you may be able to defer up to $19,000 of your compensation (or 100% of your earned income, whichever is less). In addition, individuals age 50 or older can contribute another $6,000 to their 401(k) or 403(b) account. Be sure to ask if your employer offers a matching contribution, as that is an additional benefit. Over time, a disciplined retirement plan contribution strategy can increase the chance that you will attain your retirement goals down the road.

As a reminder, key ages for retirement planning are
• Age 50: You are allowed to begin making “catch-up contributions” to IRAs, 401(k)s and other retirement plan accounts.

• Age 59 ½: After this age, withdrawals from your tax-deferred retirement accounts are not subject to 10% early distribution penalties.

• Age 70 ½: Required Minimum Distributions must begin from most traditional retirement accounts by this age, otherwise you may be charged heavy penalties. However, distributions from 401(k) and 403(b) plans may be deferred if you are still working, unless you own 5% or more of the business. Distributions from Roth retirement accounts are not required at any age unless they are inherited from someone other than a spouse.

Community Financial Services Group manages $800 million for hundreds of individuals, families and non-profit organizations. If you are interested in meeting with a CFSG representative for unbiased investment and financial planning advice, please call 877-334-1677. Our Trust Officers can meet with you at any Community National Bank office or other convenient location.

Community Financial Services Group, LLC (CFSG) is the Trust and Investment management affiliate of Community National Bank. CFSG accounts are

• Not deposits or other obligations of the bank
• Not guaranteed by the bank
• Not insured by the FDIC; and
• The investments are subject to risk, including the possible gain or loss of principal.