Individual Retirement Account

Seattle Bank offers IRA CD accounts with standard terms of 12 months to 60 months. Our IRA CDs can be opened online easily and securely, as well as in-person.

• $1,000 minimum deposit to open
• 12 month to 60 month terms available
• Tax-advantaged retirement savings¹
• Traditional, Roth, Inherited and SEP IRA options available
• No setup or annual maintenance fees
• IRA annual contribution limits apply
• Add on contributions are limited to annual contributions in the amount under 26 U.S. Code Section 219 (b)(5)(A), as annually adjusted by the Secretary of the Treasury for cost-of-living increases.
• Interest rate is fixed for duration of term
• Interest compounded daily, paid quarterly
• Penalty assessed for early withdrawal*
• 10-day grace period upon maturity
• Online account opening available for Traditional and Roth IRAs

An Individual Retirement Account (IRA) is a personal retirement savings plan available to anyone who receives taxable compensation during the year. Individual Retirement Accounts allow you to make tax-deferred¹ or tax-free¹ investments to provide financial security when you retire. These are individual owned accounts where the accountholder can name death beneficiaries.

Seattle Bank offers the following types of IRA plans:

• A Traditional IRA is a tax-deferred personal retirement savings plan where contributions may be tax deductible. Anyone who has earned income is eligible to contribute to a traditional IRA, however there are annual limits to how much you can contribute. The deductibility of the IRA is dependent on your participation in a qualified company retirement plan, your tax filing status and your Modified Adjusted Gross Income (MAGI). Required Minimum Distributions (RMD) start at age 73. Distributions are taxed when withdrawn (if the contribution was not deductible, only the interest earned is taxed when withdrawn). Click here for more information on contribution deductibility.
• A Roth IRA is a tax-advantaged¹ personal retirement savings plan where contributions are not deductible but qualified distributions and interest earned may be tax free. To open a Roth IRA, your earned income (MAGI) cannot exceed the yearly limits set by the IRS. No Required Minimum Distributions (RMD) at any age. Interest earnings will be distributed tax free if the accountholder made their first Roth contribution at least five years prior to the withdrawal and is at least 59 ½ years of age.
• A SEP IRA is a Simplified Employee Pension plan that are tax-deferred retirement savings accounts set up by business owners or self-employed individuals. Contributions are made by the employer directly to a Traditional IRA set up for each employee or for themselves. Required Minimum Distributions (RMD) start at age 73. Distributions are taxed when withdrawn. Click here more information regarding SEP plans. 

• Retirement Savings – One of the top goals for most people is saving for retirement. With their tax advantages¹ and easy eligibility, IRAs can be a powerful tool in saving for retirement. IRA funds compound and grow faster as the interest earned is not taxed each year.
• Easy Eligibility – Anyone with earned income can open a Traditional IRA, and possibly a non-working spouse if a joint tax return is filed. There are income and tax filing eligibility requirements to open a Roth IRA.
• Easy to Open – Most banks and brokerage firms offer IRAs along with several investment choices.
• Tax Deferred or Tax-Free Earnings – Taxes on interest earned on a Traditional IRA is not taxed until you withdraw it. For most people, withdrawals start after retirement when they're typically in a lower tax bracket. Interest earned on a Roth IRA is tax free if the accountholder made their first Roth contribution at least five years prior to the withdrawal and is at least 59- ½ years of age. Consult with a tax advisor for specific information.
• Tax Break¹ – Traditional IRA contributions may be tax deductible dependent on your participation in an employer sponsored retirement plan and your MAGI.
• Investment options – You control how your IRA is invested. You can choose a low risk, high yielding FDIC bank certificate of deposit, or invest in stocks, bonds or mutual funds via a brokerage firm. You can move your IRA funds from one investment vehicle to another, or from one IRA Custodian to another via an IRA Trustee Transfer.
• No or Low Fees – Many IRAs don’t charge set up, monthly or annual fees, and if they do, the fee is typically much lower than a 401(k)-advisor fee. Seattle Bank does not charge any setup, monthly or annual fees for IRA CDs.
• Low Minimum Opening Balance Requirements – Many IRAs have low opening balance requirements. Some as low as $100 to $1,000 depending on the investment vehicle. Seattle Bank's IRA CDs have a $1,000 minimum balance to open.
• Early Withdrawal Tax Penalty Exceptions – There are exceptions that allow you to make a withdrawal from your IRA plan prior to age 59-1/2 without incurring an early withdrawal tax penalty. One of the exceptions is for qualified first-time home buyers who are allowed to withdraw up to $10,000 penalty free. Please see the IRS site for additional exceptions to tax on early distributions. If you have your IRA funds in a CD, the early withdrawal penalty for removing funds during the CD term may still apply.

• Traditional – Anyone who has earned income is eligible to contribute to a Traditional IRA.  However, the deductibility of the IRA is dependent on the accountholder’s participation in a qualified company retirement plan, their tax filing status¹ and their Modified Adjusted Gross Income (MAGI). There are no age or income limits; as long as you have earned income, you can keep contributing to a Traditional IRA. A spouse with no income may be able to open and contribute to an IRA as long as one spouse has earned income, the married couple file a joint tax return and that the combined contributions of both spouses doesn’t exceed the taxable compensation reported on the joint tax return.
• Roth – There are two factors that determine whether you are eligible to contribute to a Roth IRA: your Modified Adjusted Gross Income (MAGI) and your tax filing status. If these totals are exceeded, you are not eligible to contribute to a Roth. There are no age limits; as long as you have earned income, you can keep contributing to a Roth IRA. A spouse with no income may be able to open and contribute to an IRA as long as one spouse has earned income, the married couple file a joint tax return and that the combined contributions of both spouses doesn't exceed the taxable compensation reported on the joint tax return.

Roth MAGI Limits for 2024:

• • • Single tax filer                        $161,000
    • Married, Joint Filing               $240,000

• • SEP – Any size business, including self-employed individuals. Easily established by adopting FORM 5305-SEP, a SEP prototype or an individually designed plan document. SEP IRAs are funded by employer contributions for the business owner and eligible employees. The employer must contribute equally for all eligible employees.

Contribution Types

• Regular Annual Contributions – Contribution limits apply. Please see the IRS site for current year contribution limits.
• Rollover – funds from existing IRA accounts, or an employer-sponsored plan such as a 401(k), 403(b) or 457(b) plan where the funds have been paid to you, the IRA customer and you currently have possession of those funds.
• Direct Rollover - Funds from an employer-sponsored plan such as a 401(k), 403(b) or 457(b) plan where the funds are held by the Plan Administrator and/or you, the IRA customer, received a check that is payable to the new IRA Custodian for the Benefit of (FBO) you, the IRA customer.
• Custodian/Trustee Transfer – Direct Movement of IRA assets by the IRA Custodians. You, the IRA customer, do NOT have possession of the IRA funds. The funds transfer is done between IRA Custodians/Trustees. Or you received a check that is payable to the new IRA Custodian for the Benefit of (FBO) you, the IRA customer.

Contribution Limits

• Traditional and Roth: For 2024, the total contributions you make to all of your Traditional IRAs and Roth IRAs can't be more than:

• • $7,000 for 2024 per 26 U.S. Code Section 219 (b)(5)(A), as annually adjusted by the Secretary of the Treasury for cost-of-living increases, or
  • If less, your taxable compensation for the year

The IRA contribution limit does not apply to:

• • Rollover contributions
  • Trustee to Trustee Transfers contributions

• SEP: Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of:

• • 25% of the employee's compensation, or
  • $69,000 for 2024

Note: Elective salary deferrals and catch-up contributions are not permitted in SEP plans. Please see SEP IRS site for more information.

Contribution Deadlines

• Traditional: You can make contributions for the prior year up to the tax filing date (excluding extensions), typically, April 15^th.
• Roth: You can make contributions for the prior year up to the tax filing date (excluding extensions), typically, April 15^th.
• SEP: You can set up an SEP plan and contribute for a year as late as the due date (including extensions) of your business income tax return for the year you want to establish the plan.

• Traditional – IRS penalty incurred for withdrawals prior to age 59-1/2. Required Minimum Distributions (RMD), the minimum amount of money that must be withdrawn annually per the IRS, start at age 73. Distributions are taxed when withdrawn (if the contribution was not deductible, only the interest earned is taxed when withdrawn). CD early withdrawal penalty may apply if funds are withdrawn prior to the CD maturity date. CD penalty typically waived for RMDs.
• Roth – IRS penalty incurred for withdrawals of earnings prior to age 59-1/2. Contributions can be withdrawn at any age. No required minimum distributions. Interest earnings will be distributed tax free if the accountholder made their first Roth contribution at least five years prior to the withdrawal and is at least 59- ½ years of age. CD early withdrawal penalty also applies if funds are withdrawn prior to the CD maturity date.
• SEP – IRS penalty incurred for withdrawals prior to age 59-1/2. Required Minimum Distributions (RMD), the minimum amount of money that must be withdrawn annually per the IRS, start at age 73. Distributions are taxed when withdrawn. CD early withdrawal penalty may apply if funds are withdrawn prior to the CD maturity date. CD penalty typically waived for RMDs.

• A beneficiary can be a U.S. person, charity or non-profit organization, a trust, or your estate. The individual can be a minor under 18 years old.
• An IRA accountholder can name both Primary and Contingent beneficiaries. If the IRA accountholder is deceased, funds will be paid to the primary beneficiaries. If the primary beneficiaries precede the IRA accountholder in death, the funds will be paid to the contingent beneficiaries. If more than one primary beneficiary or one contingent beneficiary is designated and no percentages are indicated, the beneficiaries will be deemed to own equal share percentages of the IRA.
• If you are married and reside in a community property state, you must designate your spouse as your sole primary beneficiary. If you choose to designate a primary beneficiary other than or in addition to your spouse, your spouse must sign a waiver consent.