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Individual Retirement Accounts (IRA's)
We offer both Traditional and Roth IRAs as regular savings accounts and CDs.
Now, thanks to the biggest tax cut in 20 years, retirement
plans are more powerful. You're eligible to contribute more to individual
retirement accounts (IRAs) than ever before.
With an IRA, you can invest your money in a variety of
savings and investments such as CDs (share certificates), mutual funds, and
individual stocks and bonds.
You can have more than one IRA, even two accounts of the
same type. But the more you have, the more you have to manage, so experts
recommend keeping the number of accounts to a minimum. Rollovers also are
possible from one IRA into another.
Here's an IRA summary. For more information, talk with an
IRA specialist at our credit union.
Traditional IRA
- Offers tax-deferred earnings and possibly tax- deductible
contributions if you meet the requirements. If you and/or your spouse
actively participate in an employer-sponsored retirement plan, you can deduct contributions only if your income is below
certain limits. If you're not participating in a retirement plan, your
traditional IRA contribution is deductible regardless of income. Ask your
credit union IRA representative for details.
- You can contribute if you have earned income and you will not reach age
70 1/2, by the end of the year.
If you file a joint tax return, you can treat your spouse's income as your
own.
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You can contribute to a traditional IRA, an
employer-sponsored retirement plan, and a Roth IRA in the same year.
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When you withdraw from a traditional IRA, your withdrawal will be treated as taxable income.
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If you make a withdrawal before age 59 1/2 you generally
must pay a 10% tax on early distributions. There are exceptions, such as
rollovers, so ask your credit union IRA representative for more details
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You must begin taking required minimum distributions at
age 70 1/2.
Roth IRA
- Contributions are not tax-deductible, however, you can withdraw contributions and earnings from a Roth
IRA tax-free.
- To contribute to a Roth IRA, joint filers' modified
adjusted gross income must be less than $160,000 and less than $110,000 for
single filers.
You can withdraw funds tax-free before retirement under certain conditions: if your funds have been in
your account for at least five years, you're older than age 59 1/2, you buy a
first-time home, or if you become disabled or die.
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You're not required to start taking minimum distributions
when you reach age 70 1/2 as with a traditional IRA. You can let your money
continue to grow tax-free for as long as you like.
New IRA contribution limits
- Up from $2,000 a year to $3,000 a year in 2002- 2004;
$4,000 a year in 2005-2007; and $5,000 a year in 2008. The limit will be
adjusted annually for inflation in $500 increments starting in 2009.
- Those age 50 and older have a catch-up deal; they can
contribute an extra $500 a year from 2002 through 2005 and an extra $1,000 a
year starting in 2006 and thereafter.
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Need help with financial planning – call us
today to see how we can assist you.
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