The chart below is designed to show you the value of saving on a regular basis and the benefit of compounding interest.*
Traditional IRA contributions are deducted from your income and are not taxed during the year in which the contribution is made. Instead, taxes are paid at the time the funds are withdrawn.
For example, if you had earned income in the amount of $30,000 during the year and put in $2,000 into your IRA, you would pay income on only $28,000. Your contribution will grow free of tax through out the years. In 30 years, at 4.29% Annual Percentage Yield, with a $2,000 contribution per year, the total value in your account would have grown to $124,868.
When you withdraw money, after age 59 ½, it will be taxed at your ordinary income tax rate at that time. If you withdraw money before the age of 59 ½,an IRS penalty will apply.
* The chart above is based on an Annual Percentage Yield of 4.29%. Yields may vary with a First National Bank IRA.
First National Bank of Durango Account information: