Cambridge Savings Bank

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Careers: Application Process

How do I apply for a job at Cambridge Savings Bank?

You can create your personal profile and submit your resume to Cambridge Savings Bank by clicking the title of the position you are interested in.

How do I know my resume was submitted?

You will receive an automated email confirming submission of your resume into the database.

What happens to my resume once it goes into the system?

The resume is reviewed by an HR representative.

Will I be contacted directly by Cambridge Savings Bank?

Yes, if your skill set matches the job requirements, a member of the Human Resources department will contact you to schedule an interview.

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Careers: Student Relations

Are internships paid opportunities?

Yes, students are generally paid an hourly rate based on their academic level and previous work experience.

Can recent college graduates apply for full-time positions?

Yes! We are interested in hiring qualified candidates who have creative approaches to meeting the needs of our customers. We encourage recent college graduates to review our job postings under the job opportunities section on our website. Once you identify a position(s) that interests you, submit your resume for that specific position. We encourage recent college graduates who complete internship assignments at Cambridge Savings Bank to apply for full-time, regular positions upon graduation.

Does Cambridge Savings Bank post their internship opportunities?

When an internship opportunity is available at Cambridge Savings Bank, we will post the position on our website, as well as at specific colleges and universities.

Online Business Banking: Security Tokens

Do I need another token if Cambridge Savings Bank enables additional services?

Once activated, the same token is used for all token supported services.

Do I need to activate my token again if my company adds a new service that requires a token?

No. You only need to activate the token one time. Once activated, the same token is used whenever you are prompted to enter a token code.

Do I need to activate the token again if I log in from a different computer?

No. You only need to activate the token one time, regardless of which computer is used.

What should I do if I lose my token?

Contact your company administrator who, in turn, should contact the Cambridge Savings Business Banking Group at (617) 441-7051.

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Online Business Banking

Are there any additional security features?

We utilize Enhanced Login Security, or ELS, which strengthens security at login by adding an additional authentication factor beyond the basic login requirements. So, when you login with ELS, our online banking system is not only authenticating your credentials, it is validating that the access is being requested from your computer and browser. Enhanced Login Security is required and is an easy way to further help prevent identity theft and fraud.

Are there minimum or maximum amounts for bill payments?

Bill payments can be made for any amount up to $9,999.99 per item, with a maximum of up to $19,999.99 total payments per day.

Can all of my bills be electronic bills?

Electronic billing is only available from select companies and the list of companies continues to grow.

Can I access Business Online Banking any time?

Yes, you have access to your account information 24 hours a day, 7 days a week.

Can I assign “nicknames” to my business accounts linked to online banking?

Yes, you can name your accounts in a manner that allows you to easily identify them. In fact, this is encouraged since certain applications generate e-mail confirmation messages back to the company and reference the account by the account description or “nickname” assigned.

Can I download my account transactions into my personal finance management software?

Yes, you can download your transactions from within the online banking system to QuickBooks® or Quicken®. You can also create a comma-delimited text file that can be read by most database systems, spreadsheets and word processors.

Can I register more than one computer for ELS?

If you try to login to the online banking system on an additional computer/browser, the system will give you the opportunity to enroll for ELS by presenting you with security questions, displaying two of the five questions you have already set-up. You will need to answer those two questions correctly in order to login. Any computer you intend to use with regularity should be registered in the online banking system. To do this, login to the online banking system and select “Enroll this Computer for Future Use”.

Note: We highly recommend that you do not enroll public computers, such as those found in libraries and internet cafes for ELS.

Can I set-up notifications about Bill Payment services?

Yes, with you can set-up a variety of alerts that serve as notifications or reminders of payments related to a particular payee or online billing. The alert notifications are sent via email. To set-up these alerts, go to the Payee screen. Next to the payee, under Email Notifications, click Change. You will be able to add, edit or delete notifications on this screen.

Can I transfer funds between different banks?

Transferring funds to accounts at other banks can be done by wire transfer or through the ACH service; both are available as optional services requiring Bank approval.

How can I verify that a payment has been made or cancel a payment?

Go to the Payments screen to view, edit or delete a payment. This screen displays the status of all bill payments that are pending or have been sent to the payee. Payments with a status of “pending” may be edited or deleted.

How do I apply for Bill Payment?

You should discuss applying for Bill Payment with a Cambridge Savings Bank representative. They will assist you with the application process.

How do I get started?

To apply, call 888-864-BANK and ask to speak to a Business Relationship Manager.

How do I know if my payee sends electronic bills?

If a payee can provide electronic billing, you will be prompted by the online business banking system with a “Set up e-Bills” or “Set up online bills” screen. Just fill in the requested information and click “Continue” to start receiving electronic billing from that payee.

How do I pay electronic bills?

You can pay one or more electronic bills from several places within the online business banking system. Unpaid bills appear in the Incoming Bills area on the Payments Overview page. Recurring payments to an electronic biller can be found in the Pending Payments section of this page. At any point, you can opt to View Bill. After viewing a bill, you can select Pay Bill to provide payment instructions. Or, you can select File Bill to merely have the bill stored.

How do users access the online business banking system?

The system is accessible through our web site, www.cambridgesavings.com. The Primary Administrator has full access and authority for the assigned accounts and is able to add and delete users at any time.

Each company has a unique Company ID and secret Company Password. In addition, each user will have a unique User ID and secret User Password. Both are needed to access accounts through online banking.

How does Enhanced Login Security work?

The online banking system will prompt you to choose five security questions and enter answers for each. You will then be asked to add extra security to your computer.

To avoid the need to answer your security questions at subsequent logins, please click the checkbox on the Enhanced Login Security screen that says ‘Enroll this Computer for Future Use.’

How frequently is my Cambridge Savings Bank information updated?

Typically, your account’s balance is current. But, if an asterisk appears next to a balance, it is as of the last business day.

How long does it take for a payment to reach the payee?

An electronic bill takes approximately 3 business days to reach the payee; a paper check will take up to 5 business days to reach the payee. Your payee list will display what payment form (check or electronic) the payee accepts.

How long does it take to set up a new payee in the Bill Payment system?

It just takes a few minutes. Once you have entered a new payee, you may enter a payment to your new payee immediately.

How much history is available in Business Online Banking?

Your Balance information, Account History transaction information, and your Bill Payment history are stored up to 12 months.

Is the online business banking system secure?

At Cambridge Savings Bank, we have taken every precaution necessary to be sure your account information, transactions and emails within the system are transmitted safely and securely. The latest methods in internet banking system security are used to increase and monitor the integrity and security of the system. Our system supports 128-bit data encryption which is the highest level available commercially. You will need a browser that supports this level of encryption.

What capabilities are provided with the wire transfer service?

The online banking system simplifies the process of sending wire transfers. Authorized users can set up electronic wire transfer requests within the system to wire funds up to the approved dollar limit.

What features and services are available through the ACH2 system?

ACH services provide an automated and electronic means to send and receive payments. Direct Deposit allows you to process transactions such as employee payroll, dividend payments, expense reimbursements and trust disbursements. Direct Payment allows you to collect payments such as rents, leases, membership dues and utility bills.

What happens if I make a bill payment and there are insufficient funds in my account?

If a “non-sufficient funds” (NSF) condition exists, the payment will be returned via banking channels. You may also be charged a fee (please refer to the current Fee Schedule).

If a payment is returned, your bill payment account will be “blocked,” preventing any scheduled or recurring bill payments until the NSF condition is resolved. In the event that your account is “blocked,” please contact us to resolve it. If you make a deposit so your account balance is positive, the bill payment service will not work until you have contacted us.

What is “EFTPS” and what payments can be made through this service?

The Electronic Federal Tax Payment System is an internet based system allowing businesses to make Federal tax payments electronically. To use this system, you must submit an enrollment form to the IRS.

What is electronic billing?

Electronic billing is a digital version of your paper bills that you can receive through the online business banking bill payment service. Electronic bills come directly from your biller. You can view balances, transactions and other statement information on your electronic bill, and then pay your bill online with the online business banking system.

What services are available through online business banking?

You can view detailed deposit and loan account information, transfer1 funds between designated Cambridge Savings’ deposit accounts, place stop payments on checks, initiate balance alerts, set up automated transfers1 between Cambridge Savings’ checking and savings accounts based on designated balance levels, view images of cleared checks and order checks. Optional services include viewing and paying your bills online, making wire transfers, initiating Automated Clearing House2 (ACH) transactions, and making tax payments through the Electronic Federal Tax Payment System (EFTPS). Online banking also allows you to create customized reports to assist you with tracking and monitoring account activity.

1 Transfers from a money market account to another account or to third parties by preauthorized, automatic, telephone/facsimile, or computerized transfer are limited to six per statement cycle with no more than three by check, draft, point-of-sale, debit card, or similar order to third parties. For statement savings accounts, the limit is six transfers per monthly statement cycle.

2 Subject to approval.

What type of accounts can I access through online banking?

You can link any business checking, statement savings, money market, CD and most business loans and lines of credit accounts. For loan accounts, you can view information but transaction capabilities are not available at this time.

Which versions of personal finance management software are supported?

PFM software versions are always changing and being updated. The Cambridge Savings Bank online business banking system can be used with the most recent versions of QuickBooks® and Quicken®, plus the previous two releases. We support both Windows and Macintosh PFM applications.

Who do I contact if there is a problem with my payment?

Please contact our Customer Service Center at 888-418-5626 with the payee name and confirmation number of the payment that can be found on the Reports screen.

Who will be able to access the company’s accounts?

A company official with account signing authority will designate their company’s primary administrator for the online banking system. This individual will have total access to the system, and will have the ability to set up other users. For security purposes, each additional user can have full or limited access and authority based on the user’s responsibilities.

Mobile Deposit

How do I know if I am eligible to use Mobile Deposit?

To use mobile deposit, you must be a current Cambridge Savings Bank customer with a checking or savings account. You must also be enrolled in our online banking system and have downloaded the free Cambridge Savings Bank Mobile Banking app. Before depositing your first check, you must read and accept the Remote Deposit Capture Services disclosure and agreement.

How do I make my first Mobile Deposit?

  • Make sure you have downloaded the Cambridge Savings Bank Mobile Banking app for either your iPhone®, iPod touch®, iPad® or AndroidTM smartphone device
  • Sign into the Cambridge Savings Bank Mobile Banking app using your online banking user ID and password
  • Choose “Deposit Checks”
  • As part of enrollment in the service you will be asked to read and accept the Remote Deposit Capture Services disclosure and agreement (It may take up to one business day to receive approval)
  • Select the checking or savings account into which you want to deposit the check
  • Enter the amount of your check
  • Endorse the back of your check with “For Mobile Deposit Only”
  • Snap pictures of the front and back of your check
  • Submit the check for deposit

You will receive onscreen confirmation that your check was received.

How much does it cost to deposit a check with my phone?

Mobile check deposit is free for Cambridge Savings Bank customers.* Just download the Cambridge Savings Bank Mobile Banking app to begin.

*Cambridge Savings Bank does not charge you a fee for using this service. However, charges from your wireless carrier may apply. Regular account charges apply. The Mobile Check Deposit service is subject to eligibility. Deposit limits and other restrictions apply. Access to Cambridge Savings Bank’s Mobile Banking apps and Mobile Deposit require a valid Cambridge Savings Bank online banking username and password.

How will I know when the check has been posted to my account?

After submitting images of the front and back of your check, you will receive onscreen confirmation that Cambridge Savings Bank has received your deposit. You will also have the option to email a confirmation number to yourself. At that time, your check will be processed by a Cambridge Savings Bank staff member. Please see the Cambridge Savings Bank Funds Availability Policy for more information about deposits. Please do not dispose of your check or attempt to process at another institution or through another channel (ATM or in-branch). You should hold onto your check for 91 days and then destroy or shred it.

Is Mobile Deposit secure?

Check deposits made through the Cambridge Savings Bank mobile banking app are protected according to the highest financial industry standards. Security features include: password protection, internet firewalls, and 128-bit encryption. Making a deposit with your smartphone or supported tablet is safe through our online banking system.

What is Mobile Deposit?

Mobile deposit is a way to electronically deposit checks from your iPhone®, iPod touch®, iPad®, or AndroidTM device using the Cambridge Savings Mobile Banking app.

Why am I unable to deposit my check?

There are a few common errors that may cause your check to be rejected:

  • Folded or torn corners
  • Front image is not legible
  • Dollar Amounts do not match
  • Routing and account numbers are unclear
  • No camera on the phone device
  • Image is too dark

It is best to make your mobile deposits in a well lit area to prevent shadows and poor image quality, and keep your hands and fingers out of the image before taking the picture.

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Chip Card Technology

01. What is a chip card?

A chip card is a debit or credit card with a built-in microchip that provides greater security of your personal and payment information. The microchip is encrypted, which means that it is extremely difficult to copy or counterfeit, helping to further protect you against fraud.

02. I’ve never heard of a chip card. Is this something new?

Although chip cards are not yet common in the U.S., many countries around the world have been using chip cards for many years to provide enhanced protection to cardholders against fraud. Over the next few years, chip cards and chip card payment machines will become a standard in the U.S.

03. What are the benefits of chip card technology?

Chip card technology makes an already secure payment system even more secure by providing an additional layer of protection on every transaction, helping to further reduce the risk of fraud.

04. What makes a chip card more secure?

The embedded microchip encrypts all of your payment information, making it very difficult for someone to steal. When paying with a chip card, a unique code is assigned to each transaction and the code will be validated before the payment is processed.

05. Does this mean that a magnetic stripe card is not secure?

Using magnetic stripe cards is still a safe and secure method of payment. The transition to chip card technology is the next step in electronic payments to enhance card security and further protect your payment information against fraud.

06. How is paying with a chip card different from the way I pay today?

Instead of swiping your card to make a payment, you’ll insert your card into the front of the chip card payment machine with the chip facing up. Your card will stay in the machine until the transaction is complete. When the transaction is complete, you’ll be prompted to remove your card from the chip card payment machine.

07. What if a retailer doesn’t have chip card payment machines?

Your chip card will still include a magnetic stripe on the back of the card. If a retailer does not accept chip card payments, you’ll still be able to swipe your card and pay as you normally would. However, if the merchant offers both chip card payment machines and traditional swipe machines, you’ll be required to use the chip card machine.

08. Will I still have a PIN to access my account at the ATM?

Yes, you will still enter a PIN when using an ATM. If you already have a PIN established for your card, you can continue to use that same PIN without change. If you’re receiving a new card, a temporary PIN will be issued to you in the mail. If you don’t know your PIN, please visit one of our branches for immediate PIN re-issue, or call 888.418.5626 to reset your PIN over the phone or request a new PIN to be mailed to you.

09. Can I use my chip card for Internet, telephone or Apple Pay™ purchases?

Yes, you can continue to use your chip card the same way you currently use it today when making purchases online, over the phone or with Apple Pay.

10. What is the difference between a chip card, EMV card, and Smart chip card?

Nothing. These are all just different terms used to reference the same technology.

11. When will I receive my new chip card?

Our credit cards are currently equipped with chip card technology, and our debit cards will include the technology on any new or reissued card beginning this fall, 2015. By 2017, all Cambridge Savings Bank cards will be transitioned to chip cards.

12. Are there any additional fees for chip cards?

There are no additional fees associated with the new chip cards.

13. Who can I contact if I have additional questions?

Our Customer Contact Center is here to help! Call 888.418.5626 or email your question to info@cambridgesavings.com

Cambridge Savings Bank credit cards are provided through partnership with Elan Financial Services.

Apple, the Apple logo, iPhone®, iPad, and Apple Watch™ are trademarks of Apple Inc., registered in the U.S. and other countries. Apple Pay is a trademark of Apple Inc.

Apple Pay™: General

01. What is Apple Pay?

Apple Pay™ allows you to use your iPhone® 6, iPhone 6 Plus, Apple Watch™, iPad Air 2, or iPad Mini 3 as a secure, private, and easy payment method by adding debit and credit cards to the Passbook application.

02. What devices can use Apple Pay?

Products Via an App
used on Merchant Terminal
 iPhone 6  √  √
 iPhone 6 Plus  √  √
 iPad Air 2  √
 iPad mini 3  √
 Apple Watch  √

 

03. What merchants offer Apple Pay?

Many merchants are now offering the option to pay using Apple Pay and more merchants are being added each day.

To learn more about the merchants who support Apple Pay, please click here.

04. How secure is Apple Pay?

Apple Pay is extremely secure. With every transaction, Apple Pay creates a unique transaction-specific and dynamic security code to process your payment. In addition, your debit card and credit card numbers are never used in a transaction. Instead, there is a unique Device Account Number (along with the transaction specific security code) that is used to make your payment and neither Apple nor the merchant ever sees your actual debit or credit card number.

05. What is the cost of Apple Pay?

There is no additional cost to using the Apple Pay service.

06. How many devices can I add Apple Pay to?

You may add Apple Pay on up to 9 devices that support the service.

Apple, the Apple logo, iPhone®, iPad, and Apple Watch™ are trademarks of Apple Inc., registered in the U.S. and other countries. Apple Pay is a trademark of Apple Inc.

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Apple Pay™: Set Up & Usage

01. Are my Cambridge Savings Bank debit and credit cards set up for Apple Pay?

All Cambridge Savings Bank debit cards (with the exception of business debit cards) and credit cards (with the exception of those issued by American Express) are offering Apple Pay. We anticipate that Cambridge Savings Bank American Express credit cards (issued through a partnership with Elan Financial Services) and Cambridge Savings Bank business debit cards will have Apple Pay later this year.

02. Why does my Apple Pay look different in Passbook?

Depending on the operating system on your Apple device, Apple Pay may look slightly different.

03. How do I access Passbook?

Go to your device’s application screen and click on the app that looks like the below:

Passbook

04. How do I add a card?

Set Up

  1. Open up Passbook
  2. If this is the first card you are adding, select Set Up Apple Pay
    – If your Cambridge Savings Bank card is the card that you have on file with iTunes, you can select Use Card on File with iTunes. Note: If you select this option, you will still need to enter the 3 digit security code from the back of your card.
    – If your Cambridge Savings Bank card is not on file with iTunes you will need to select Use a Different Card. Once you choose this option, you may either enter the card information or select Camera icon on the card number line. Note: If you select Camera, please position the card in the frame and all the information with the exception of the Security Code will pre-fill.
  3. If you are adding an additional card, select the plus sign at the upper right hand corner of the screen. Select Next on the next screen. Add your card information by using the Camera or choosing to Enter the Card Details Manually.

Debit Card Activation

  1. Once your Cambridge Savings Bank debit card information has been entered and the terms and agreements accepted, please call our customer service center at 844.646.5465 to activate the card for Apple Pay.
  2. Upon activation of your debit card, you will see the screen below confirming that your card has been activated:
    Apple-Pay-Activation
  3. You may now begin to use Apple Pay to make purchases.

Credit Card Activation

  1. Once your Cambridge Savings Bank credit card information has been entered and the terms and agreements accepted, your card should be activated in Passbook. If activation confirmation does not appear, please call our Card Member Services number at 800-285-5522 to activate your card for Apple Pay.
  2. Upon activation of your credit card, you will see the below screen:
    Apple-Pay-Activation-Screen

 

05. Why do I see a hold on my account after I set up Apple Pay?

The hold is in the amount of $0.00 and will not affect your balance. It is placed on your account while your card is being set up for Apple Pay and will be removed in 3 business days.

06. How do I set up a default card?

  1. Open up your Settings
  2. Select Passbook & Apple Pay
  3. Under Transaction Defaults, you will see Default Card
  4. Select Default Card and your current default card will have a check mark next to it
  5. To change your default card, select a new card and a check mark will now appear next to that card

Important Notes

  • If you have more than one card set up for Apple Pay in Passbook, Apple will automatically set your first card up as your default card
  • If you use Apple Pay without opening Passbook and selecting the card to use, then your default card will be used

07. How do I remove a card?

  1. Open up Passbook
  2. Select your Cambridge Savings Bank card, then click on the i  icon in the lower right corner
  3. Select Remove Card
  4. Confirm card removal and you will be informed that you will lose your transaction history in Apple Pay for transactions associated with this card

Important Note
– If the card you removed was your default card, Apple will assign your next card as the default and will inform you of that change

08. How do I make payments with Apple Pay?

In stores that have Apple Pay enabled on their payment terminals:

  1. Hold your phone up to the terminal
  2. Utilize Touch ID to authorize your purchase or if you do not have Touch ID, use your passcode
  3. The screen will confirm that the purchase has been completed

09. Is my transaction history stored in Apple Pay?

Apple Pay does not store your full transaction history but does allow you to view your 10 most recent transactions as notifications.

10. How do I turn notifications on or off in Apple Pay?

  1. Open up Passbook
  2. Select your Cambridge Savings Bank card, then click on the icon in the lower right corner
  3. Swipe the button under Card Notifications to the left to turn off notifications for this card

11. How do I make a purchase with a card other than my default card?

  1. Hold your phone up to the terminal but do not place your finger on the Touch ID
  2. You will now see your default card
  3. Select your default card and from your list of cards, select the card you would like to use instead
  4. Utilize the Touch ID to authorize your purchase and complete payment or if you do not have Touch ID, use your passcode

12. How do I return items bought via Apple Pay?

You can have the cashier process the return by using your Device Account number.

However, if the cashier needs your card information, you may:

  1. Hold your phone up to the terminal
  2. Choose the card you used to make the original purchase
  3. Utilize Touch ID to confirm your return or if you do not have Touch ID, use your passcode
  4. The screen will confirm that the return has been completed

13. How does my replacement card get added to Apple Pay?

To add your replacement card, please follow the steps found here.

14. What if I lose the device that I have Apple Pay on?

If you lose the device that you have Apple Pay on, we would recommend that you immediately:

  • Contact us at 888.418.5626 to report your device as lost or stolen so that we may deactivate Apple Pay on your device and/or,
  • Use the Find my iPhone or iPad option so that you can put that device in Lost Mode, effectively suspending Apple Pay

     To use this option:

  1. Sign into iCloud with your Apple ID
  2. Select All Devices to find the device that you wish to put in Lost Mode
  3. Select Lost Mode and follow the onscreen instructions

15. How does my transaction history in Apple Pay differ from my transaction history in Online Banking?

Initial authorization amounts may be different from the final transaction amount so please always refer to your Cambridge Savings Bank Online Banking account to view and confirm your official debit card activity and refer to your Card Member Services site to view and confirm your official credit card activity.

Important Note

16. How do I dispute an Apple Pay transaction?

Apple Pay transaction with a Cambridge Savings Bank debit card
In the event of a dispute, please contact us at info@cambridgesavings.com or 888.418.5626 to file a claim.
Visit our website to learn more.

Apple Pay transaction with a Cambridge Savings Bank credit card
In the event of a dispute, please call the Card Member Services number located on the back of your credit card.

Apple, the Apple logo, iPhone®, iPad, and Apple Watch™ are trademarks of Apple Inc., registered in the U.S. and other countries. Apple Pay is a trademark of Apple Inc.

Apple Pay™: Terms

01. Is my Cambridge Savings Bank debit or credit card protected against fraud under Apple Pay?

Yes, you will continue to receive the same protection that you enjoy today with your Cambridge Savings Bank debit or credit card.

02. What is the privacy policy for my Cambridge Savings Bank card with Apple Pay?

Your privacy policy remains the same with the use of Apple Pay. You can access your privacy policy at any time by:

  1. Open up Passbook
  2. Select your Cambridge Savings Bank card, then click on the in the lower right corner
  3. Swipe to the bottom of the screen and select Privacy Policy

03. What are the terms and conditions for my Cambridge Savings Bank card with Apple Pay?

Your terms and conditions remains the same with the use of Apple Pay. You can access your terms and conditions at any time by:

  1. Open up Passbook
  2. Select your Cambridge Savings Bank card, then click on the i  in the lower right corner
  3. Swipe to the bottom of the screen and select Terms and Conditions

Apple, the Apple logo, iPhone®, iPad, and Apple Watch™ are trademarks of Apple Inc., registered in the U.S. and other countries. Apple Pay is a trademark of Apple Inc.

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Money Market

01. How can I order checks for my Money Market Account?

If you already have a Money Market Account with us and need to order replacement checks, click here.

02. How will my personal money market account look when I access it via an ATM?

Account Open Date
Will Show as
Before July 1st, 2015 A checking account
After July 1st, 2015 A savings account

Please note that there are no changes to our money market accounts other than how it will be classified in our systems – checking vs. savings.

03. How will my personal money market account look in online banking?

Account Open Date
Will Show as
Before July 1st, 2015 A checking account
After July 1st, 2015 A savings account

Please note that there are no changes to our money market accounts other than how it will be classified in our systems – checking vs. savings.

529 College Savings Plans

What can funds be used for?

You can use 529 College Savings Plan assets to pay for qualified education expenses at almost any college or post-secondary program in the United States or select foreign institutions. Qualified expenses include tuition, room and board, books, fees, supplies and equipment (such as a computer).

Are contributions tax-deductible?

No, contributions are not deductible from federal taxes. For state tax purposes, each state makes its own determination. In Massachusetts, contributions are not tax deductible.

Are my plan assets FDIC or DIF insured?

No, because your assets are invested in mutual funds, they are not protected by FDIC or DIF insurance and can decline in value. However, if you are concerned about risk, Mayflower Advisors can help you find a portfolio that will meet your needs.

Can funds be used for private elementary or high school tuition?

No, the 529 College Savings Plan is limited to undergraduate and graduate tuition and expenses only.

Can I be a beneficiary?

Yes, if you are planning on continuing your education in an undergraduate or graduate program, you can list yourself as a beneficiary.

Can I change beneficiaries?

Yes, you have the flexibility to do so at any time.

Can I change the investment options for the assets in my account?

Each time you contribute to your account, you can elect how each contribution should be allocated among the investment options. However, you may reallocate the assets in your account to one or more alternative investment option(s) only once every calendar year or whenever you change the account’s beneficiary.

Can I continue to contribute to a Coverdell Education Savings Account if I’m enrolled in a 529 College Savings Plan?

Yes, you may. In fact, you may use the money in a Coverdell Education Savings Account to pay for K-12 expenses.

Can I make automatic contributions?

Yes, you can arrange to have funds automatically deducted from a Cambridge Savings Checking or Savings account.

Can I roll over or transfer an Educational IRA, UGMA/UTMA or existing 529 College Savings Plan?

You may roll over or transfer assets from any gifting or qualified savings plan to a 529 College Savings Plan at Cambridge Savings. Rollovers/Transfers may be subject to taxes. A financial advisor from Mayflower Advisors will explain how.

Can I withdraw funds for purposes other than education?

Yes, if you need to access your money, you can withdraw funds and pay a 10% federal penalty on earnings plus any applicable taxes.

Do I have to pay gift taxes on contributions?

The IRS grants each individual an annual gift tax exclusion of $14,000 (as of 2014). In addition, 529 College Savings Plans allow you to accelerate the use of this so that you may contribute $70,000 immediately and avoid gift taxes by using up the next five years of gift tax exclusions.

How do I get started?

Stop by your nearest Branch Location or call us at (888) 418-5626. A Cambridge Savings representative will gather information about you and arrange to have a financial advisor from Mayflower Advisors contact you at your convenience.

How do I know what funds to invest in?

A financial advisor from Mayflower Advisors will take the time to review your timeframe and risk tolerance and will help you build a customized portfolio that addresses your unique situation.

How does the 529 College Savings Plan affect financial aid considerations?

Unlike gifting accounts (UGMA/UTMAs) and Coverdell Education Savings Accounts (formerly Education IRAs), 529 College Savings Plan assets are currently attributed to the account owner, not the student, thereby usually lowering the impact on financial aid. Keep in mind, however, that this could change, given ever-changing financial aid rules.

How much must I invest to start?

Depending on the plan that best suits your needs, you may be able to get started with as little as $15 and continue to invest periodically. You can also invest a lump sum if you prefer.

Is a 529 College Savings Plan the same as a pre-paid tuition plan such as the UPlan?

No, though both are state-sponsored programs and fall under Section 529 of the Internal Revenue Code, they are not the same. With a prepaid tuition plan, you prepay tuition at today’s rates for a beneficiary to attend college at a future date. This involves pre-selecting a participating school, generally a public school. With the 529 College Savings Plan, you have the flexibility to use funds at just about any college in the United States as well as some abroad. Additionally, you can build assets tax-deferred.

Is it a new plan?

No, the 529 College Savings Plan is not a new plan. However, The Economic Growth and Tax Reconciliation Act of 2001 helped make 529 College Savings Plans more attractive by allowing distributions for qualified higher education expenses to be exempt from federal taxes.

Please Note:

Depending on the plan that best suits your needs, you may be able to get started with as little as $15 and continue to invest periodically. You can also invest a lump sum if you prefer.

What are my investment options?

Most 529 College Savings Plans are invested in a portfolio of publicly-traded mutual funds or similar investment vehicles. Mayflower Advisors can help you determine which 529 College Savings Programs and investment options are right for you.

What are the estate tax benefits of the 529 College Savings Plan?

The Plan’s high contribution limit means a contributor can give away a substantial sum of money in a single year (couples filing jointly can make a gift of up to $140,000 per beneficiary). Gifting large sums can effectively lower the value of one’s taxable estate upon death.

What are the tax benefits of 529 College Savings Plans?

Your contributions and earnings grow tax-deferred and you don’t have to pay federal taxes when funds are withdrawn to pay for qualified expenses. Exemption on earnings from state taxes is determined by the individual state. Plus, in most cases, both your contributions and earnings are not considered part of your taxable estate.

What does tax-deferred growth mean?

When you invest in a 529 College Savings Plan, your earnings will not be assessed federal or state taxes, allowing your assets to accumulate without paying taxes on capital gains, dividends or interest.

What does the 529 College Savings Plan offer that other college savings options don’t?

In general, the 529 College Savings Plan offers tax-deferred growth, tax-free qualified distributions, higher contribution limits, no income or age restrictions, and greater control for the account owner.

What if the beneficiary does not attend college?

You have three options:

  1. Leave the money in the account in case the beneficiary changes their mind;
  2. Change the beneficiary; or
  3. Make a non-qualified withdrawal (which would be subject to a 10% federal penalty on earnings plus any applicable taxes).

What is a 529 College Savings Plan?

Named after Section 529 of the Internal Revenue Code, this state-sponsored college savings program allows individuals to accumulate tax-advantaged funds for financing college expenses for a beneficiary.

What is the maximum amount I can contribute?

Maximum contributions vary by plan (a financial advisor from Mayflower Advisors can help you identify the differences). You may invest as little as $15 per month for some plans, or, depending upon the program you select, you may invest a lump sum and contribute periodically until your total assets in one account equal $305,000. In doing so, you may utilize as much as $70,000 in any five-year period without exceeding your federal gift tax exclusion.

Who can set up a 529 plan?

Anyone can establish a 529 College Savings Plan. You can even establish a plan for yourself. There are no age or income restrictions.

Who is Mayflower Advisors, LLC?

To give you access to 529 Plans, Cambridge Savings has partnered with Mayflower Advisors, LLC1. Mayflower Advisors, LLC is a full-service independent financial consulting firm located in Boston. Mayflower Advisors is dedicated to helping clients build and protect wealth. Mayflower Advisors, LLC offers a wide range of financial products and services to individuals and business owners.

1 Mayflower Advisors, LLC is a separate entity from Wells Fargo Advisors Financial Network, LLC (WFAFN). Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC, Member SIPC.

Who maintains control of the account – the student or me?

Unlike with other college savings plans, a 529 College Savings Plan allows you, not the beneficiary, to maintain control of the plan.

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Roth IRAs

01. What is a Roth IRA?

A Roth IRA is an individual retirement account where regular contributions are not tax deductible, but distributions of these contributions are tax free. Under certain conditions, the earnings on Roth IRA contributions are also tax free when distributed.

The term “tax free” means free from federal income taxes.

02. Am I Eligible for a Roth IRA?

There are two requirements for eligibility to make regular contributions to a Roth IRA: you must have compensation (or your spouse must have compensation) and your modified adjusted gross income (MAGI) for any tax year cannot exceed certain prescribed limits. These limits are subject to annual cost-of-living adjustments (COLAs), if any.

2015 MAGI Limits:

Modified AGI (MAGI)
Single
Married, Filing Jointly
Married, Filing Separately*
Less than $10,000 Full Contribution Full Contribution Phaseout
$10,000 – $116,000 Full Contribution Full Contribution No Contribution
$116,001 – $130,999 Phaseout Full Contribution No Contribution
$131,000 – $183,000 No Contribution Full Contribution No Contribution
$183,001 – $192,999 No Contribution Phaseout No Contribution
$193,000 or over No Contribution No Contribution No Contribution

*If you are married, filing separately, and lived apart from your spouse the entire year, you can use the MAGI limit for a single filer to determine your contribution limit.

03. How Much Can I Contribute Each Year?

You may contribute any amount up to 100 percent of your compensation or the amount set forth in the chart that follows, whichever is less, aggregated between a traditional and a Roth IRA. Additionally, if you have attained age 50 or older by the end of your taxable year, you are eligible to make catch-up contributions.

Contribution Limits:

Tax Year
Contribution Limit
Catch-Up Limit
Total Limit for Age 50 and Over
2015 $5,500 $1,000 $6,500
2016 and later years $5,500 + COLA* $1,000 $6,500 + COLA*

*Subject to annual cost-of-living adjustments (COLAs), if any.

04. What is the Contribution Deadline for Funding a Roth IRA?

For a given tax year, you can open and fund a Roth IRA any time between January 1 and the date your tax return is due for the year, excluding extensions. For most taxpayers, this is April 15 of the following year. The deadline may be extended in some situations. Examples include a federally declared disaster, a terroristic or military action, or service in a combat zone.

05. What Assets Can I Move to a Roth IRA?

  • Traditional IRA—Traditional IRA assets may be converted to a Roth IRA. The distribution is subject to income tax, but is not subject to the 10 percent early-distribution penalty tax.
    
  • Employer Plan—Eligible assets from an employer plan may be indirectly or directly rolled over to a Roth IRA. The taxable portion of the amount rolled over is subject to income tax.
    
  • Designated Roth Account—Assets in a designated Roth account that are part of an Internal Revenue Code Section 401(a), 403(b), or governmental 457(b) plan may be indirectly or directly rolled over to a Roth IRA and are not subject to income tax.

06. What if I Need Access to My Money Now?

A helpful feature of the Roth IRA is that, for distributions, regular contribution amounts are returned first without tax or penalty. Converted assets and rollovers from employer plans are returned next. The converted and employer plan rollover assets are returned tax free; however, they may be subject to the 10% early-distribution penalty tax. Earnings are returned last. Earnings may be subject to tax and penalty.

07. Do I Pay Taxes on My Earnings?

No, provided you take the earnings as part of a qualified distribution. That’s the best part of the Roth IRA. Unlike a traditional IRA, you cannot take a tax deduction for any of the contributions that you make to a Roth IRA. However, when you are ready to make a withdrawal, you may not pay taxes on any of the earnings that your contributions have generated.

08. What is a Qualified Distribution?

In order for earnings to be tax free, you must first meet a five-year holding period for your Roth IRA. This period begins with the tax year for which your first contribution is made. After that, any earnings you withdraw for a qualified distribution reason are income tax free and penalty tax free. Qualified distributions are:

  • Distributions made on or after the date on which you attain age 59 ½,
  • Distributions made to your beneficiary (or your estate) upon your death,
  • Distributions attributable to you being disabled, and
  • Qualified first-time home buyer distributions (up to $10,000).

09. Does the 10 Percent Early-Distribution Penalty Tax Apply if I Withdraw My Money?

Distributions of earnings not taken as a qualified distribution, or for one of the reasons listed below, are subject to both taxes and a 10 percent early-distribution penalty tax.

Distributions of assets converted from an IRA or assets rolled over from an employer plan that are not taken as a qualified distribution, after the five-year holding period, or for one of the reasons listed below, are subject to the 10 percent early-distribution penalty tax.


  • Substantially equal periodic payments,
    
  • Qualified reservist distributions,
    
  • Eligible medical expenses in excess of 10 percent of your adjusted gross income (AGI),
    
  • Health insurance premiums for eligible unemployed individuals,
    
  • Qualified higher education expenses,
    
  • Distributions taken within the first five years for any of these reasons: age 59 ½, death, disability, or first-time home purchase, and
    
  • Distributions paid directly to the IRS due to IRS levy.

10. When Do I Have to Start Taking Distributions From My Roth IRA?

You never have to take distributions from your Roth IRA. That’s another advantage of the Roth IRA over the traditional IRA. Assets held in a Roth IRA are not subject to age 70 1⁄2 required minimum distributions.

11. What Happens in the Event of My Death?

Your named beneficiary(ies) will receive the rights to the balance in your Roth IRA. Distributions to the beneficiary(ies) will be made in accordance with the required minimum distribution rules and your Roth IRA agreement.

12. How Do I Open a Roth IRA?

See any of our Personal Bankers. We will explain the nature of these accounts in more detail, and help you complete the forms necessary to establish your Roth IRA.

This information is intended to provide general information on federal tax laws governing Roth IRAs. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590, Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information.

Roth IRAs: Conversion

01. What is a Conversion?

A conversion is the taxable movement of certain plan assets to a Roth IRA. Although the converted amount is subject to federal income tax for the year of conversion, the benefit is that earnings/gains on the converted assets are tax free when withdrawn from the Roth IRA.

02. What Type of Plan Assets Can Be Converted?

You may convert assets held in the following types of plans:

  • Traditional IRA (including simplified employee pension IRA assets)
  • Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA. Note: SIMPLE IRA assets may not be converted to a Roth IRA until two years after the date of the employer’s initial contribution to the SIMPLE IRA
  • Eligible retirement plan assets (other than designated Roth account assets) from an employer plan (e.g., 401(k), profit sharing, pension, money purchase, federal thrift savings, and tax-sheltered annuity plans)

A plan participant or beneficiary may make a qualified rollover, subject to taxation, from an employer’s eligible retirement plan to a Roth IRA or Roth Beneficiary IRA. These employer plan-to-Roth IRA qualified rollovers will be referred to as conversions.

03. Are There Eligibility, Age, or Compensation Requirements to Convert?

No. There are no eligibility, age, or compensation requirements to convert assets to a Roth IRA. However, if you are age 70½ or older you must satisfy the plan’s remaining required minimum distribution prior to converting.

04. Are the Assets Taxed on a Conversion?

Consult with your tax or legal professional regarding taxation prior to a conversion. A conversion is a taxable event reported to the IRS. Any previously deducted contributions, pretax deferrals, pre-tax rollovers, and earnings/gains are subject to federal income tax at your marginal tax rate.

Nondeductible contributions, after-tax deferrals, and after-tax rollovers (also referred to as basis) are not subject to federal income tax. However, the earnings/gains are subject to federal income tax.

For a conversion to a Roth IRA to be taxable in a specific tax year, the distribution of assets from an employer retirement plan, traditional IRA, or SIMPLE IRA must occur before the last day of that tax year. For calendar-year taxpayers, this deadline is December 31.

05. Can I Convert Only the Nontaxable Basis of my Traditional and SIMPLE IRAs?

No. Traditional and SIMPLE IRA distributions must be a ratio of the pre-tax assets and aftertax assets within your combined traditional and SIMPLE IRAs. Pre-tax assets include previously deductible regular contributions and taxable employer plan rollover contributions and earnings. The nontaxable basis or after-tax assets include nondeductible regular contributions, after-tax employer plan rollover contributions, and qualified reservist repayments. You use IRS Form 8606, Nondeductible IRAs, to report and document this nontaxable basis.

Distributions from an employer-sponsored retirement plan are generally taxed in the same pro-rata manner.

06. Are Converted Assets Subject to the Early Distribution Penalty Tax?

No. The 10 percent early distribution penalty tax, for distributions made prior to age 59½, does not apply to the taxable assets converted to a Roth IRA.

07. Can I Convert Assets That I’m Currently Taking a Series of Substantially Equal Periodic Payments From?

Yes. You may convert the entire traditional or SIMPLE IRA from which you are currently taking a series of substantially equal periodic payments to a Roth IRA. However, you must continue the series of payments from the Roth IRA for the remainder of the required period. The conversion to a Roth IRA is not a disqualifying modification of the scheduled series of payments. If you do not continue the distributions after the conversion, the 10 percent penalty tax for early withdrawal applies retroactively to all distributions in the series prior to your reaching age 59½, both before and after the conversion to a Roth IRA.

08. What Tax Issues Should I Consider Before Converting Assets?

Since individual circumstances and future assumptions will determine whether a conversion might be beneficial, consult with your tax or legal professional prior to converting any assets. Some questions to consider include:

  • Will you need the assets in retirement?
    
  • Do you have assets other than those being converted from which to pay the taxes owed?
    
  • Will you be in a higher tax bracket in the future rather than in the year you are converting?
    
  • Do you have the time necessary to recoup the assets used in paying the taxes?
    
  • Is one of your goals to pass on tax-free income to your heirs?
    
  • Do you think you may owe income tax on your social security benefits?

09. Can I Undo a Conversion?

Yes. A conversion may initially appear beneficial, but sometimes you may realize a mistake in judgment after completing a conversion. An available remedy to undo part or all of the conversion amount is a recharacterization.

10. What is a Recharacterization?

You may be able to treat a contribution made to one type of individual retirement account (IRA) as having been made to a different type of IRA. Examples include a recharacterization of all or a part of a traditional IRA-to-Roth IRA conversion back to a traditional IRA, and a Roth IRA rollover or direct rollover (conversion) from an employer plan to a traditional IRA.

The recharacterized amount may be all or part of the original contribution, plus any earnings attributable to that amount.

You must complete a recharacterization on or before your federal income tax-filing due date, including extensions, for the taxable year for which the contribution was made.

Reasons to recharacterize include:

-Tax-Year Contributions. You may want to recharacterize if you make a regular traditional IRA contribution that you later determine is nondeductible. Recharacterization allows you to treat your traditional IRA nondeductible contribution as a regular Roth IRA contribution.

The reverse may also occur. You may want to recharacterize if you make a regular Roth IRA contribution and later discover that you could have claimed a tax deduction for a traditional IRA contribution or because you have exceeded your modified adjusted gross income (MAGI) limits and are ineligible for part or all of the regular contribution.

-Conversions. If a conversion moves you into a higher tax bracket, you may decide to recharacterize the portion subject to the higher rate.

To avoid paying taxes on converted assets that have declined in value (i.e., property-type investments), you may decide to recharacterize a conversion.

11. How Do I Initiate a Conversion or Recharacterization?

See any of our Personal Bankers. We will collect the required information and help you complete the necessary forms.

This information is intended to provide general information on federal tax laws governing conversions and recharacterizations. It is not intended to provide legal advice or be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590, Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information.

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Traditional IRAs

01. Am I Eligible to Make a Tax-Year Contribution to a Traditional IRA?

If you are younger than age 70 1⁄2 for the entire tax year, and have compensation, you are eligible to establish and make an annual tax-year contribution to a traditional IRA, even if you already participate in a qualified pension or profit-sharing plan (including a 401(k)), certain government plans, a tax-sheltered annuity, a simplified employee pension (SEP) plan, or a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan established by an employer.

02. What is Compensation?

Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your net income for personal services performed for the business. All taxable alimony is considered compensation. Interest, dividends, retirement income, and most rental income are passive income sources and are not considered compensation.

03. How Much Can I Contribute to My IRA?

You may contribute any amount up to 100 percent of your compensation or the amount set forth in the chart below, whichever is less, to a traditional IRA (or aggregated between a traditional and a Roth IRA). Additionally, if you are age 50 or older by the end of your tax year, you are eligible to make catch-up contributions.

 Contribution Limits:

Tax Year
Contribution Limit
Catch-Up Limit
Total Limit for Age 50 and Over
2015 $5,500 $1,000 $6,500
2016 and later years $5,500 + COLA*  $1,000 $6,500 + COLA*

*Subject to annual cost-of-living adjustments (COLAs), if any.

The amount of any tax refund contributed directly to your IRA is subject to the annual contribution limit.

04. Do I Pay Taxes on the Earnings of My IRA?

All earnings on your IRA contributions (deductible and/or nondeductible) remain tax-deferred until you take withdrawals from the IRA.

05. Do I Get a Tax Deduction for My Contribution?

Deductibility of your contribution is based on whether you and/or your spouse, if married, are an active participant in an employer-sponsored retirement plan. If you are an active participant, the deductible amount is dependent on modified adjusted gross income (MAGI) and income tax-filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction. Your tax or legal professional can help you determine your actual deduction.

06. Basic Rules for Determining IRA Deductibility

If you are single and are not an active participant in an employer-sponsored retirement plan, or are married and neither you nor your spouse are active participants, you are eligible for a full deduction no matter how large your income.

If both you and your spouse are active participants, if you are single and an active participant, or if you are not an active participant but your spouse is, you may be eligible for either a full or partial deduction depending on your MAGI.

See your tax or legal professional for assistance in determining IRA deductibility.

07. What if I’m Not Eligible for a Deductible IRA Contribution?

You can still make nondeductible contributions to your IRA. You may also be eligible for a Roth IRA.

08. How Are the Assets Taxed at Distribution?

You must include the taxable portion of the amount withdrawn as income on your tax return. If you are younger than age 59 1⁄2, and do not meet one of the exceptions, you must also pay a 10 percent penalty tax for early distribution. The portion of a distribution attributable to nondeductible contributions or rollovers of after-tax assets is not taxable when withdrawn, nor is it subject to the 10 percent early-distribution penalty tax.

If certain requirements are met, you may take a once-ina-lifetime tax-free IRA distribution to fund your Health Savings Account (HSA) tax-year contribution. We recommend consulting your tax or legal professional to make sure this qualified HSA funding distribution is available and the right financial decision for you.

09. When Can I Withdraw Assets From My IRA Without Incurring Any (IRS) Penalties?

You can withdraw assets from your IRA without a 10 percent early-distribution penalty tax any time after you reach age 59 1⁄2. You can also avoid the early-distribution penalty tax before age 59 1⁄2 if you become disabled, if the distributions are part of certain periodic payments, for medical expenses in excess of 10 percent of your adjusted gross income, for health insurance premiums if you have been receiving unemployment compensation for at least 12 weeks, for distributions paid directly to the IRS due to IRS levy, for qualified reservist distributions, for eligible higher education expenses, or for a first-time home purchase. When you reach age 70 1⁄2, you must begin to take required minimum distributions or severe tax penalties will apply. Bank penalties may apply.

10. What Happens to My IRA in the Event of My Death?

Your named beneficiary(ies) will receive the entire proceeds of the IRA. Your beneficiary(ies) will not be subject to the 10 percent early-distribution penalty tax. Distributions to your beneficiary(ies) will be made in accordance with the required minimum distribution rules and your IRA agreement.

11. What is a Spousal IRA?

A married individual can take advantage of a unique IRA contribution rule if he/she has little or no compensation, allowing him/her to make a regular IRA contribution. A married couple must meet two conditions for one spouse to take advantage of the spousal rules. First, the married couple must file a joint federal income tax return. Second, the compensation of the individual benefitting from the spousal rules must be less than the compensation of his/her spouse. A married couple can contribute up to 100 percent of their combined compensation or the contribution limit, whichever is less. The amounts can be divided in any manner between the two spouses’ IRAs with no more than the annual limit being contributed to either spouse’s IRA. Catch-up contributions are available for spouses age 50 or older and increase the allowable contribution limit.

12. How Do I Move Assets From One IRA to Another?

There are two methods you can use to move assets from one IRA to another: rollover and transfer. For a rollover, you have 60 calendar days following the date of receipt to roll over the distribution to another IRA. You are limited to one rollover for all of your IRAs per 1-year (12-month) period (that is, only one nontaxable IRA-to-IRA rollover per taxpayer in a year—not one rollover for each IRA per year). A transfer occurs when the assets are moved from one IRA to another IRA without you having control or custody of the assets. Unlike rollovers, there are no time limits or frequency limits on the number of transfers permitted.

13. How Do I Move Assets From an Employer- Sponsored Retirement Plan (ERP) to a Traditional IRA?

An eligible rollover distribution from one of these plans may be indirectly or directly rolled over to an IRA. Generally, an eligible rollover distribution is any distribution except one that is (1) part of a series of substantially equal periodic payments over your single life expectancy or joint life expectancy of you and your beneficiary or for a specified period of ten years or more, (2) a required minimum distribution for an employee age 70 1⁄2 or older, or (3) any hardship distribution.

An indirect rollover occurs when assets distributed from your ERP are sent to you, then subsequently rolled over by you to a traditional IRA within 60 calendar days.

A direct rollover occurs when assets distributed from your ERP are sent to the IRA custodian/trustee for the benefit of your traditional IRA.

Taxable ERP distributions sent to you that are eligible for rollover are subject to a mandatory 20 percent federal income tax withholding at the time of distribution. Assets moved to an IRA via a direct rollover are not subject to withholding.

As with an IRA-to-IRA rollover, an ERP plan recipient has 60 calendar days following the date of receipt to roll over any portion of the distribution to an IRA. The one rollover per 1-year limitation does not apply to direct or indirect rollovers from an ERP to an IRA.

14. Is There a Contribution Deadline for Funding an IRA?

IRA contributions for a taxable year can be funded any time between the first day of a tax year and the date a tax return is due for that year, excluding extensions. For most taxpayers, this due date is April 15 of the following year.

The deadline may be extended in some situations. Examples include a federally declared disaster, a terroristic or military action, or service in a combat zone.

15. Are There Other Tax Advantages to Establishing an IRA?

A unique saver’s tax credit is available for lower income taxpayers who contribute to an IRA and/or an employer’s salary deferral plan. See your tax or legal professional for more information.

16. How Do I Open an IRA?

See any of our Personal Bankers. We can help explain the nature of these accounts in more detail and help you complete the forms necessary to establish your IRA.

This information is intended to provide general information concerning federal tax laws governing traditional IRAs. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590, Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information.

Moving Assets Between Retirement Plans

01. What is the Advantage of Moving Assets Between Eligible Retirement Plans?

An indirect rollover, direct rollover, transfer or recharacterization of your assets between eligible retirement plans allows you to move assets from one tax-advantaged retirement plan into another. This will allow you to avoid possible income and penalty taxes and continue tax-deferred growth until withdrawn.

02. What is an Indirect Rollover? (IRA-To-IRA Rollover, Transfer, And Recharacterization)

An indirect rollover occurs when IRA assets you receive are sent directly to you and you contribute them to an IRA (including back to the distributing IRA) within 60 calendar days of receipt. The 60-day period begins the day after you receive the distribution.

You are limited to one indirect rollover per 1-year (12-month) period. You may only roll over one IRA distribution per 1-year period aggregated between all of your IRAs. For this purpose IRA includes rollovers among traditional (including SEP), SIMPLE, and Roth IRAs. For example, if you have IRA 1, IRA 2, and IRA 3, and take a distribution from IRA 1 and roll it over into a new IRA 4, you will have to wait 1 year from the date of that distribution to take another distribution from any of your IRAs and subsequently roll it over into an IRA. The 1-year limitation does not apply to rollovers related to first-time homebuyer distributions, distributions converted to a Roth IRA, and rollovers from an employer-sponsored eligible retirement plan.

03. What is a Transfer?

A transfer occurs when IRA assets move directly from one IRA to another IRA without your direct control or custody of those assets.

04. What is a Recharacterization?

You may be able to treat a contribution made to one type of individual retirement account (IRA) as having been made to a different type of IRA. Examples include a recharacterization of all or a part of a traditional IRA-to-Roth IRA conversion back to a traditional IRA, and a Roth IRA rollover or direct rollover (conversion) from an employer plan to a traditional IRA.

The recharacterized amount may be all or part of the original contribution, plus any earnings attributable to that amount.

You must complete a recharacterization on or before your federal income tax-filing due date, including extensions, for the taxable year for which the contribution was made.

Reasons to recharacterize include:

-Tax-Year Contributions. You may want to recharacterize if you make a regular traditional IRA contribution that you later determine is nondeductible. Recharacterization allows you to treat your traditional IRA nondeductible contribution as a regular Roth IRA contribution.

The reverse may also occur. You may want to recharacterize if you make a regular Roth IRA contribution and later discover that you could have claimed a tax deduction for a traditional IRA contribution or because you have exceeded your modified adjusted gross income (MAGI) limits and are ineligible for part or all of the regular Roth contribution.

-Conversions. If a conversion moves you into a higher tax bracket, you may decide to recharacterize the portion subject to the higher rate.

To avoid paying taxes on converted assets that have declined in value (i.e., property-type investments), you may decide to recharacterize a conversion.

-Rollovers from an Employer Retirement Plan. Similar to conversions, due to possible tax implications, employer retirement plan-to-Roth IRA qualified indirect or direct rollovers may be recharacterized to a traditional IRA. Employer retirement plan-to-Roth beneficiary IRA indirect (available only to a spouse beneficiary) or direct rollovers (available to a spouse or nonspouse beneficiary) may be recharacterized to a traditional beneficiary IRA.

05. Which Employer Plans Can Make Eligible Rollover Distributions?

Employer plans that can make eligible rollover distributions include:

  • Qualified trusts under IRC Section 401(a)
  • Annuity plans under IRC Section 403(a)
  • Annuity contracts under IRC Section 403(b)
  • Certain governmental IRC Section 457(b) plans

06. What Assets Are Not Eligible for Rollover to an IRA?

Assets from employer plans that are not eligible for rollover to an IRA include:

  • Required minimum distributions generally beginning in the age 70 1/2 year or after death
    
  • Any part of a series of substantially equal periodic payments over a life expectancy period or for a period of ten years or more
    
  • Any hardship distribution
    
  • A loan that is treated as a distribution due to default or because other requirements have not been met
    
  • Costs reported as distributions associated with life insurance coverage
  • Distributions of excess contributions or excess deferrals
    
  • Corrective distributions of IRC Section 415 limit excesses and earnings

07. When Am I Eligible for a Distribution From My Employer’s Plan?

Ask your employer or check the latest summary plan description you received as a participant. Common distribution events for plan participants may include:

  • Separation from service—including retirement
    
  • Your disability
    
  • Attaining normal retirement age under the plan
    
  • Termination of the plan

08. What is an Indirect Rollover? (Employer Plans-To-IRA Rollover)

If you receive an eligible rollover distribution from your employer’s plan, you can roll over all or a portion of that distribution to a traditional or Roth IRA or another qualified employer plan within 60 calendar days of receipt. The 60-day period begins the day after you receive the distribution.

An eligible rollover distribution that you receive is subject to mandatory 20 percent federal income tax withholding at the time of the distribution.

Any portion of the distribution (including the 20 percent withheld by the plan administrator) not rolled over to a traditional IRA within 60 calendar days may be taxed as ordinary income, and a 10 percent additional penalty tax may apply if you are younger than age 59 ½. Indirect rollovers to Roth IRAs are generally taxed as ordinary income but avoid the 10 percent penalty tax.

The one rollover per 1-year (12-month) limitation does not apply to the rollover of qualified employer plan assets to an IRA.

09. What is a Direct Rollover?

A direct rollover is like an IRA-to-IRA transfer in that an employer plan distribution is paid directly to an IRA or another qualified employer plan without your direct control or custody of the assets. Direct rollovers to traditional IRAs incur no federal income tax or penalties. Therefore, direct rollover distributions are not subject to the mandatory 20 percent federal income tax withholding.

10. Can I Roll Over Roth Contributions in an Employer-Sponsored Eligible Retirement Plan?

If your employer has adopted a qualified Roth contribution program for its qualified plan as defined in Internal Revenue Code (IRC) Section 402A, assets, plus earnings, from these designated Roth accounts can be indirectly or directly rolled over to a Roth IRA or to a designated Roth account in another eligible retirement plan.

11. Can I Roll Over Traditional or Roth IRA Assets to an Employer Plan?

Only traditional IRA assets from an employer plan distribution are eligible for direct or indirect rollover to a qualified employer plan. However, nontaxable assets from these distributions are not eligible for rollover. Employer plans do not have to accept rollovers from a traditional IRA. Roth IRA assets are not eligible for rollover to a qualified employer plan.

This information is intended to provide general information on federal tax laws governing the movement of assets between retirement plans. It is not intended to provide legal advice or be a detailed explanation of the rules or how such rules may apply to your individual circumstances. For specific information, you are encouraged to consult your tax or legal professional. IRS Publication 590, Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information.

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Simplified Employee Pension

01. What is a Simplified Employee Pension (SEP) Plan?

A SEP plan is a retirement plan established by an employer. Each year, the employer can contribute a certain percentage of each eligible employee’s compensation directly to the employee’s traditional (SEP) IRA.

02. Am I Eligible for a SEP Plan?

As a business owner, whether incorporated or not, you may establish a SEP plan. Sole proprietors and partnerships can have SEP plans, even if there are no other employees. However, if your business currently maintains a qualified retirement plan, you cannot establish the Internal Revenue Service (IRS) model SEP plan for your business.

03. What is the Maximum SEP Contribution?

Under the IRS model SEP plan, you must contribute a uniform percentage of compensation for each eligible employee. The maximum contribution is the lesser of the contribution amount or 25 percent of each employee’s compensation. The chart that follows shows these amounts.

SEP Plan Limits:

Tax Year
Contribution Amount
Compensation
2015 $53,000 $265,000
2016 and later years $53,000 + COLA* $265,000 + COLA*

*Subject to annual cost-of-living adjustments (COLAs), if any.

 

For an employee, compensation is generally the Form W-2 wages from the employer sponsoring the SEP plan. For a self-employed person, compensation is his/her earned income from self-employment. Special adjustments to compensation are necessary before a self-employed person can apply the desired contribution percentage.

04. Do I Get a Tax Deduction for My SEP Plan Contributions?

Yes! Dollars you contribute on behalf of yourself and your employees, within the previously-mentioned limits, are generally deductible as a business expense. A self-employed individual claims his/her personal SEP plan contribution as an adjustment to gross income on his/her personal income tax return.

05. Must I Contribute for Each of My Employees?

No. The SEP plan may exclude certain employees from an annual SEP plan contribution because of:

  • Age—A SEP plan may exclude employees who are younger than 21 years of age. However, an employer must contribute for any eligible employee who is older than age 21, even those over age 701⁄2.
    
  • Service—A SEP plan may exclude employees who have not worked in at least three of the immediately preceding five years.
    
  • Minimum Compensation—A SEP plan may also exclude employees who have earned less than $600 during 2015 (subject to annual cost-of-living adjustments), if any.
    
  • Other—A SEP plan may also exclude nonresident aliens receiving no U.S.-source income from the employer, as well as employees covered under a collective bargaining agreement if retirement benefits were a subject of negotiation.

06. Must I Contribute the Same Percentage Each Year?

No. You have until the due date of your business’s federal income tax return to determine and make your SEP plan contribution each year. If you wish, you may skip the contribution entirely for any year.

07. What Happens to the Assets After I Make SEP Plan Contributions?

All SEP plan contributions are made to eligible employees’ traditional (SEP) IRAs. Once the SEP contribution has been made, each employee’s account will be subject to all of the traditional IRA rules. These include a penalty on withdrawals prior to age 59 1⁄2 and required minimum distributions at
age 70 1⁄2

08. What Happens to My Account in the Event of My Death?

Your named beneficiary(ies) will receive the rights to your account. Distributions to the beneficiary(ies) will be made in accordance with required minimum distribution rules and your IRA plan agreement.

09. May I Have a Traditional or Roth IRA in Addition to a SEP Plan?

Yes. You may contribute to traditional and/or Roth IRAs if eligible. If a SEP plan contribution is made, you are considered an active participant in an employer-maintained retirement plan. Therefore, the deductibility of your traditional IRA contribution will depend on your modified adjusted gross income and income tax-filing status.

10. Is it Difficult to Establish a SEP Plan?

No. To establish an IRS model SEP plan, you must complete an IRS-approved form, provide a copy to each eligible employee, and have each of them establish a traditional (SEP) IRA.

11. When Can I Establish a SEP Plan?

The deadline for establishing or contributing to a SEP plan is your business’s income tax-filing deadline, including extensions.

12. Can I Establish a SEP Plan That Allows Me and/or My Employees to Defer Salary Through the SEP Plan?

No, however an employer that had established a salary deferral SEP prior to 1997 could continue an existing SEP plan with this provision.

13. Is There a Tax Credit Available to Start a SEP Plan?

Yes. A tax credit under Internal Revenue Code 45E is available to offset pension plan startup costs for eligible small employers. The amount of the credit is 50 percent of a plan’s qualified startup costs, which include establishment and administration costs as well as for retirement-related education of employees, not to exceed $500 for the first year and the two taxable years immediately following.

An eligible employer uses IRS Form 8881, Credit for Small Employer Pension Plan Startup Costs, to claim the credit. The tax credit is available for costs paid or incurred in the first three years. Contact your tax or legal professional to determine your eligibility for this tax credit.

14. How Do I Establish a SEP Plan?

See any of our Personal Bankers and we will explain the nature of these plans in more detail. You should consult your tax or legal professional prior to establishing a SEP plan for your business.

This information is intended to provide general information on federal tax laws governing simplified employee pension plans. It is not intended to provide legal advice or to be a detailed explanation of the rules or how such rules may apply to an employer’s individual circumstances.

 

For specific information, an employer should consult a tax or legal professional. IRS Publication 560, Retirement Plans for Small Business, IRS Publication 590, Individual Retirement Arrangements (IRAs), and the IRS’s web site, www.irs.gov, may also provide helpful information.

Careers: Advancement

Are there opportunities for me to transfer to other departments within the organization as a Cambridge Savings Bank employee?

Any full-time or part-time regular employee of Cambridge Savings Bank, who has been in their current position for a minimum of six (6) months, and is performing well in their current role is eligible to explore other opportunities within the company.