Perspective from the President

By Chris Cassidy, CEO

Thanks to the wise advice of my Trust Company colleagues, I immediately opened a Roth IRA when I started full-time here in 2006. Unfortunately, the apartment I was renting in Burlington was not cheap, and finding funds to contribute to a retirement account was not always easy. Cutting expenses where I could, I began contributing whatever small amounts that were freed up.

When I began my career, The Standard & Poor’s 500 stock index traded at 1,280. Today, the S&P 500 trades at about 4,000. In hindsight, I should have spent less and saved more in those early days, but I am glad I contributed what I did.

The Individual Retirement Account (IRA) was introduced as part of the Employee Retirement Income Security Act of 1974 and was made popular with the Economic Recovery Tax Act of 1981. The Roth IRA was created by the Taxpayer Relief Act of 1997.

With a Traditional IRA, contributions are made with pre-tax dollars. The assets grow tax-deferred, and withdrawals are taxed as current income. With a Roth IRA, contributions are made with after-tax dollars. The assets grow tax-free, and withdrawals are tax-free.

Since the time of their creation, the growth in both Traditional and Roth IRA balances has been tremendous, due to both contributions and long-term investment growth. According to the Survey of Consumer Finance (SCF), in 2019 there were $9.4 trillion worth of assets in Traditional IRAs and $1 trillion worth of assets in Roth IRAs. Furthermore, over 11 million taxpayers made either Roth or Traditional IRA contributions in 2019.

Many individuals retiring today began work in the 1970s and 1980s and have been contributing to retirement accounts for much of their working careers, and many individuals have a significant amount of their overall wealth invested in these retirement accounts. Understanding how Traditional IRAs and Roth IRAs fit into estate planning–as well as the rules surrounding distributions and payouts–is very important.

Fortunately, Trust Company of Vermont has several professionals with extensive knowledge about the rules and regulations inherent in IRA administration. One such professional is Kasey Franzoni, who has written a very timely article about inherited IRAs and payouts. Kasey already had extensive trust experience when she was hired by Trust Company of Vermont in 2019. Since joining Trust Company of Vermont, Kasey has also obtained the Certified IRA Services Professional (CISP) designation. Kasey is a fantastic resource for employees and clients. A longtime resident of Rutland, she lives there with her husband, Peter.