Frequently Asked Questions

IRA Redistribution

Q: I am leaving my job and must decide what to do with my retirement plan assets. What are my options?
A: The four most common retirement plan distribution options to choose from are:

• Making a direct rollover into a rollover IRA
• Making a direct rollover into your new employer’s plan
• Leaving the money in your current employer’s plan
• Taking a cash distribution

Q: How do they differ?
A: DIRECT ROLLOVER INTO ROLLOVER IRA: A Rollover IRA allows you to move your eligible rollover money from your employer’s retirement plan directly to an IRA without paying current taxes or penalties. If you decide to keep your retirement savings working for you, a Rollover Individual Retirement Account (IRA) may be a smart choice because of its ease and convenience.

ROLLOVER TO NEW EMPLOYER’S PLAN: If you are changing jobs and your new employer sponsors a qualified retirement plan that accepts rollovers, you may opt to move your eligible rollover money directly into your new employer’s plan. Talk to the plan administrator at your new company, as rules and investment options vary.

LEAVE MONEY IN CURRENT PLAN: Generally, this option is available if your vested account balance in the plan is greater than $5,000. You may elect to take your money out at a later date or keep the money in the plan until normal retirement age. Many distribution options available to you today will be available when you decide to take your money out of the plan. While this may be the easiest course of action to take now, later on you may find it too restrictive. Check with your plan administrator for details.

CASH DISTRIBUTION: If you decide to take your retirement distribution in cash now, you may end up with much less than you were expecting. That’s because your distribution will be subject to:

• 20% automatic withholding
• Additional federal income taxes, up to 16% or more
• Early withdrawal penalty
  (If you’re younger than age 59-1/2, or have separated from service before age 55, you may owe another 10% of your distribution to the IRS.)
• State and local income taxes; If applicable, you may also owe state and local income taxes on your distribution

Q: Which is the best option for me?
A: A number of factors must be considered, so it is always best to consult with a financial advisor. He or she can talk with you about your goals, then help devise the best financial plan to help you reach those goals. We have two sets of professionals who work on IRA redistribution plans: our investment counselors (who handle IRAs with less than $20,000) and our trust advisors (who handle IRAs with balances in excess of $20,000).

Q: What if I want to invest the money after it is withdrawn?
A: Again, our professionals can assist you in considering the best investment strategies to meet your needs. Our team will consider such important issues as short-term versus long-term investments, diversification of your portfolio and more.

Q: How do I decide?
A: It’s best to develop a relationship with a financial advisor. We’d love to meet with you and assist you in mapping out the right plan for you. Best of all, it costs you absolutely nothing to talk with us. Just give us a call, and we’ll be glad to help.

Most Frequently Asked Questions about Trusts

Q. Do I have to have a trust to use your investment services?
A. Many of our customers choose trust arrangements because of the unique advantages they offer. No, you’re not required to create a trust. If you prefer, you can put our professionals to work on a less formal basis. All it takes is a simple letter of instructions, designating us to act as your investment agent.

Q. What are the advantages of a trust?
A. With a trust you can not only draw on our broad investment capabilities, but also arrange to have us perform any number of special services, now or in the future. These personalized services could range from making payments of estimated taxes while you’re traveling abroad to providing full personal financial management in the event you suffer an incapacitating illness.

You can also name one or more beneficiaries to receive the assets of your trust at your death. These distributions avoid probate. Or, you can have your trust continue beyond your lifetime, serving as a source of continuing income and support for your spouse, a child or others whom you designate.

Q. Is it difficult to set up a trust?
A. Not at all. To put a Countybank trust advisor to work as your trustee, you take two simple steps. You bring us the money and/or securities you wish to place in trust, and you give us your written instructions in the form of a trust agreement. The agreement, drawn up by your attorney, is signed by you (as creator of the trust) and by Countybank (as trustee). That’s all there is to it.

Q. If I create a trust, can I maintain control of it?
A. Certainly. Our trust customers control their trusts in three ways:
1. The trust agreement specifies that they may make withdrawals (or additions) at any time.
2. They reserve the right to cancel the trust.
3. They reserve the right to give us new or different instructions by amending the trust agreement.

Q. Are trust services expensive?
A. No. Our fees are competitive with those charged by investment advisory firms (for services that may not include custodianship of securities, record keeping and other conveniences) or by mutual funds.

Q. How big does a trust fund have to be?
A. If you think of millions of dollars when you hear the word "trust," you’re the victim of a widespread misconception. Today’s trust institutions have developed ways to handle even relatively small trusts efficiently. In any case, we don’t think in terms of fixed minimums. Instead we ask ourselves, "Is a trust the best way to meet this person’s financial management needs?" To find out whether a trust would be right for you, just contact our trust services division. One of our trust advisors will be happy to sit down with you to determine if a trust is right for you.

Q. How much of a return will I get on my money?
A. That depends on your goals — current income, long-term growth to offset inflation, or some balance of the two —and on ever-changing investment conditions.

Historically, diversified portfolios of good quality stocks have produced a total annual return (dividends plus growth in principal value) averaging around 10%. Bonds have produced somewhat lower returns overall, but they offer a higher level of current income than stocks.

As your trustee, our goal is to provide reasonably consistent returns over the years. We emphasize careful asset allocation, the selection of quality investments and constant vigilance.

Q. Are trust funds insured by the FDIC?
A. Primarily, trust funds are invested in stocks, bonds or other income-producing assets. These trust investments are not bank deposits. Securities and other assets administered by a bank as trustee are held separate from the bank’s own assets, under strict audit controls, and cannot be reached by the bank’s creditors

As a result, the need for FDIC insurance is generally limited to uninvested trust cash, such as income awaiting distribution. Under FDIC regulations, uninvested funds held or deposited by the bank as trustee for a revocable trust are insured together with other deposits of the trust’s owner up to a total of $100,000.

Q. How can I find out more about trusts?
A. That’s easy. Our trust advisors will be glad to assemble further information for you, analyze your investment requirements and answer questions not covered here. Just give us a call.