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Individual Retirement Accounts (IRA)

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Who can open and contribute to an IRA?

Generally, anyone who earns income and is under the age of 70½ (for Traditional IRAs).

What are the basic similarities and differences between a Traditional and Roth IRA?

Traditional and Roth IRAs are similar in that both provide tax-deferred growth on earnings. Depending on your age and income, a Traditional IRA allows tax-deductible contributions, however, distributions are taxable. On the other hand, Roth IRA contributions are made after taxes and allow for tax-free distributions as long as the account is 5 years old and you’re at least 59½ years old.

How much can I contribute to a Traditional or Roth IRA?

The annual contribution limit for 2015, 2016 and 2017 is $5,500, or $6,500 if you’re age 50 or older. Your Roth IRA contributions may also be limited based on your filing status and income. See for further information.

What is the difference between tax-deferred and tax-deductible?

Tax-deferred means all earnings in your IRA are not taxed (until withdrawn). Therefore, all of your money remains invested so that it can continue to generate additional earnings. Tax-deductible means you can deduct your IRA contribution off the top of your income, thus allowing you to pay less income tax in the year of your contribution. Contributions may be tax-deductible depending on whether you are covered by an employer’s retirement plan and your income level. We recommend that you speak with your Tax Advisor.

Can I rollover my retirement plan monies into a Bank of Hawaii Deposit or Investment IRA if I retire or change jobs?

Yes. To avoid the 20% withholding and/or current income taxes, it is highly recommended that you do exactly that. Your money will continue to grow tax-deferred. However, situations may vary. Please consult your tax advisor before rolling your monies into an IRA.

When can I take penalty-free withdrawals from my IRA?

Generally, at age 59½. However, there are some conditions under which a withdrawal can be made without tax penalties before age 59½. Also, your ability to make a penalty-free withdrawal may depend on the type of IRA you have. Consult your tax advisor before making your decision.

Does an IRA balance qualify me for the benefits of a Bankohana Account?

Yes! Your deposit and investment IRA balances at Bank of Hawaii count toward qualifying you for a Bankohana Account and all the money savings benefits that go with it including fee waivers for many Bank of Hawaii services.