Existing IRA Account Holders – The Credit Union is No Longer Offering IRA Accounts

Plan For A Secure Retirement

Social Security and pension plans no longer can be relied on to provide all of the income you’ll need to retire. That’s why opening an Individual Retirement Account is so important.

Depending on which account you open, you can enjoy either tax free distributions when you retire or you can take advantage of a yearly tax deduction and defer taxes on the interest your account accumulates. Simply choose a Traditional IRA for the yearly tax deduction or a Roth IRA for tax free savings, or both, up to the annual contribution limit.

If you are age 50 or older, you can take advantage of the “catch up” provision and contribute even more! Be sure to check with your tax adviser. You can also access the Internal Revenue Service IRA Contribution Limits online.

Traditional IRA

  • With a Traditional IRA, your contributions may be tax-deductible and you can grow your savings tax-deferred until you retire. Then, when you do retire your distributions are taxed based on your current income level
  • You must be under age 70 ½ to be eligible for a Traditional IRA
  • Non-working spouses can make fully deductible contributions to an IRA, even if their spouse participates in a retirement program as long as their joint income does not exceed $150,000
  • Before age 59 ½, you may be able to withdraw money without a penalty to purchase a first home (up to $10,000 maximum) or pay qualified costs on a higher education.
  • You can’t make contributions after the age of 70 ½
  • Check with your tax adviser

Advantages of a Roth IRA

The major advantages of a Roth IRA is that you pay taxes on your yearly contributions as regular income, but your account earnings and future withdrawals are tax free, plus you can continue to make contributions after age 70 ½ if you are employed.

  • Penalty free withdrawals after 5 years
  • Tax free earnings after age 59 ½
  • Contributions allowed after age 70 ½ when employed
  • No required distribution at age 70 ½ or in your lifetime
  • Tax-free if used for first home purchase (up to $10,000) or education
  • Tax-free if disabled or upon death
  • Check with your tax adviser

Coverdell Education Savings Account (ESA)

A Coverdell Education Savings Account is sometimes called an Education IRA. It is a trust or custodial account created exclusively for the purpose of paying qualified education expenses for a specified living beneficiary. Education IRAs can also accept contributions by corporations, tax-exempt organizations, and other entities. Call or stop by the credit union today for full details.