Frequently Asked Questions

How do I open a savings account?

Visit one of our professional Financial Services Counselor at any DB&T location or open an account online.

What if I have questions about opening a savings account?

Call 1-800-397-2000 or (563)589-2000 and ask for customer service.

What is a contributory (traditional) IRA?

A contributory IRA (also referred to as a traditional IRA) is an account that you may establish to save for your retirement. You may place up to $3,000* of your earned income in an IRA each year until you turn 70 1/2. You may also contribute an additional $3,000* a year of your earned income to a separate IRA for your non-income-earning spouse. The advantages of placing money in a contributory IRA are:

• The earnings (interest, dividends, capital gains) on your IRA investments are not taxed as long as the funds remain in your IRA.
• Depending on your income and on whether you or your spouse are covered by an employer's retirement plan, some or all of your annual IRA contribution may be tax deductible.

Although contributory IRAs carry tax advantages, they are subject to various tax rules. Three of the most important of these rules are:

• A distribution from an IRA is taxed as ordinary income in the year in which you take the distribution. (If you have made nondeductible contributions to your IRA, a portion of your distribution will be nontaxable.)
• If you take a distribution from your IRA before you turn 59 1/2, those funds will be subject to a 10% federal tax penalty unless an exception applies. Exceptions include withdrawals due to your disability, qualified higher education expenses, the first-time purchase of a home ($10,000 lifetime limit), uninsured medical expenses that exceed 7.5% of income, and certain unemployment-related expenses. Check with your tax advisor for more details.
• After you turn 70 1/2, you must begin taking annual distributions (required minimum distributions) from your IRA. The amount of each distribution is based on IRS life expectancy tables.

What is a Roth IRA?

A Roth IRA differs from a contributory IRA (traditional IRA) in several ways:

• You cannot make a Roth IRA contribution if your adjusted gross income (AGI) reaches the following limits:
• Single filers: $110,000; contribution is limited when AGI is between $95,000 and $110,000.
• Joint filers: $160,000; contribution is limited when AGI is between $150,000 and $160,000.
• Contributions to a Roth IRA are not tax deductible.
• After your Roth IRA has been in existence for at least 5 years, the following distributions from the account are not taxable:
• Distributions made after you turn 59 1/2.
• Distributions of up to $10,000 (lifetime limit) that are used for the first-time purchase of a home.
• Distributions made upon your death or disability.
• You may contribute to a Roth IRA after age 70 1/2.
• You are not required to take annual distributions from a Roth IRA when you turn 70 1/2.

May I contribute to both a contributory (traditional) IRA and a Roth IRA?

You may divide your annual $3,000* contribution between both types of IRAs as long as you meet the eligibility requirements for each type of account.

May I rollover money from a contributory (traditional) IRA to a Roth IRA?

If your adjusted gross income in 1998 and later years is no more than $100,000, and if you are not a married individual filing a separate return, you may roll over all or part of your existing contributory IRA or rollover IRA into a Roth IRA. However, you will have to pay income tax on the amount of the rollover. (If you have made nondeductible contributions to your IRA, a portion of the rollover will not be taxable). If you made the rollover in 1998, you will be able to pay the tax over four years.

May I transfer funds from my employer's retirement plan into an IRA?

Most employer-sponsored retirement plans-for example, profit-sharing plans, 401(k) and Keogh plans, ESOPs, and Section 403(b) tax-sheltered annuities allow their participants to withdraw funds from the plan in the form of an " eligible rollover distribution." Your employer will let you know if your distribution qualifies. You may receive such a distribution when you leave your job or when your employer terminates the retirement plan; some plans also allow you to take distributions when you reach age 55.

By rolling over this distribution into an IRA, you preserve a tax advantage: the earnings on the funds will continue to accumulate free of taxes as long as they remain in your IRA. You cannot roll over funds from an employer plan to a Roth IRA.

What is a rollover (conduit) IRA and why would I need to establish one?

When you want to roll over a distribution from an employer's plan, you have a choice: You may place the funds in your contributory IRA or you may establish a new rollover (conduit) IRA that contains only employer distributions. The second of these choices is the correct choice if you want to preserve the option of moving funds from your rollover IRA back into a future employer-sponsored retirement plan. If, instead, you place the employer distribution in your contributory IRA, you will not have that option.

*$3,500 if age 55 or older during the tax year