Nationwide Bank offers several ways to help you save for your retirement, and a way to save for education expenses. The IRAs and ESA from Nationwide Bank are safe, tax-advantaged ways to maximize your savings, and they can be set up using a certificate of deposit (CD) or money market account. Check out the current rates below.
What is an IRA?
The Individual Retirement Account (IRA) is a type of savings account that allows you to save for retirement in a tax-advantaged way. There are three types of IRAs: Traditional, Roth and Simplified Employee Pension (SEP) plans.
Traditional IRA – Your contributions to this retirement plan may be tax-deductible. You also have the potential for tax-free compounded growth, but you'll pay taxes when you take money out.
Roth IRA – Your contributions are not tax-deductible when you deposit in the account, and therefore contributions are not taxed when distributed.
SEP IRA – A SEP plan allows employers to contribute to Traditional IRAs (SEP-IRAs) set up for employees. A business of any size, even self-employed, can establish a SEP.
What is a Coverdell ESA?
A Coverdell Educational Savings Account (ESA) is a way to save money for school expenses. Your contributions are invested for the purpose of funding a student’s elementary, secondary or college education. Earnings in the account grow tax-deferred and can be withdrawn tax-free for qualified educational expenses such as tuition, fees, books, supplies, computer equipment and room and board. Money withdrawn for any other purpose is taxed and is also subject to a 10% penalty.
Here are some of the features of a Coverdell ESA:
- You can set up an account on behalf of any child, not just your own.
- You can contribute for children under 18 years of age.
- You must use the money by the time the child reaches age 30 (or transfer it to another family member).
- You can use the money for qualified expenses at elementary and secondary schools, as well as colleges – whether private, public, secular or religious.
- You can set up an account for the education expenses for a beneficiary with special needs. (Age limitations don't apply.)
- Maximum annual contributions are $2,000 per child from all sources.
- There is a contribution limit for contributors based on the adjusted gross income. Please check with your tax advisor on the most current limitations.
- You can contribute even if you've reached the maximum contribution level for a Traditional or Roth IRA.