Individual Retirement Account

Individual Retirement Accounts

An IRA at First Farmers & Merchants Bank is one of the best ways individuals can build a secure retirement fund. First Farmers offers:

  • 2-Year Variable Rate IRA.
  • 1-Year IRA Certificate of Deposit.
  • 2-Year IRA Certificate of Deposit.
  • 3-Year IRA Certificate of Deposit.
  • 5-Year IRA Certificate of Deposit.


  • No setup fee.
  • No maintenance fee.
  • Depositors insured by FDIC.

Traditional IRAs
The Traditional IRA can take either deductible or nondeductible contributions. Contributions earn tax-deferred income. Principal and income is taxed as ordinary income when withdrawn.

The Roth IRA is a nondeductible account that features tax-free withdrawals for certain distribution reasons after a five-year holding period.

Eligibility requirements include: you must have earned income (or your spouse) and your modified adjusted gross income cannot exceed certain limits. The aggregate amount that you can contribute to any Roth or traditional IRA is $5,000 (anyone over 50 - $6,000) a year.

While you cannot take a tax deduction for any of the contributions you make to a Roth, you pay no taxes on any of the qualified earnings your money has earned. As long as you meet the five-year holding period (period begins with the tax year for which the first contribution is made) and the distribution is for one of the four specific reasons listed below, the distribution is qualified and any earnings withdrawn for a qualified distribution reason are tax free and IRS penalty free. Assets held in a Roth IRA are not subject to age 70 ½ required minimum distributions. You never HAVE to take distributions from a Roth

Qualified Distributions include:

  • Distributions made on or after the date on which you attain age 59 ½.
  • Distributions made to your beneficiary (or your estate) upon your death.
  • Distributions attributable to your being disabled.
  • Qualified first-time home buyer distributions (up to $10,000).

Distributions taken for any reason other than a qualified reason are subject to taxes and may or may not be subject to penalty.

Coverdell Education Savings Account (formerly Education IRA)
The CESA is a nondeductible account that features tax-free withdrawals for a child's education expenses.

Eligibility requirements include: Eligibility of Child - no contributions on behalf of an individual after reaching age 18 or older. Eligibility of contributor - subject to Modified Adjusted Gross Income ranges. Non-individuals are not subject to Modified Adjusted Gross Income ranges. The total aggregate contribution into one or more CESA on behalf of a child is $2000 for a taxable year. Contributions may be made to a CESA and to a qualified tuition program in the same year.

While contributions to a CESA are never deductible, distributions for qualified educational expenses for any level of education are tax and penalty free. Distributions for any other reason are subject to federal income tax and a 10 percent penalty tax. However, all CESA distributions are a proportionate return of contributions and earnings with only the earnings portion of a CESA distribution potentially taxable. The portion of a distribution that is the return of CESA contributions is always nontaxable. The earnings portion of CESA distributions that exceed a designated beneficiary's annual qualified education expenses is subject to federal income tax and the 10 percent penalty tax. Any remaining balance in a CESA must be distributed before the beneficiary attains age 30. Earnings will then be included as income to the beneficiary and assessed the 10 percent premature distribution penalty if not used for education. However, before the beneficiary reaches age 30, the account can be rollled over to a CESA for a member of the same family.