A Traditional IRA is a special tax deferred savings plan authorized by the Federal Government to encourage you to accumulate money for retirement. We offer Individual Retirement Accounts (IRA’s) for your long-term, personal retirement savings, including Traditional, Roth and Education IRAs.
Dividends are compounded and paid monthly to your retirement account.
Traditional IRA’s are tax deferred until withdrawn. You may withdraw funds from your IRA at any time; however, early withdrawal penalties may apply.
A Roth IRA is an individual retirement account to which participants are able to make annual non-deductible contributions. Unlike a traditional IRA in which your earnings are tax-deferred, Roth IRA earnings can be tax-free.
You may convert your traditional IRA to a Roth IRA, provided you are a Single filer or married couple filing jointly with a modified adjusted gross income that does not exceed $100,000. Any portion of the converted amount attributable to deductible contributions and earnings must be included as taxable income. The entire taxable amount of the conversion must be included as income for the year the conversion is made.
Qualified distributions may be withdrawn tax and penalty free. Non-qualified distributions may be taxable and subject to an IRS 10% early distribution penalty. To receive more information on Roth IRA’s, contact the Credit Union.
Unlike traditional and Roth IRA’s, Education IRA’s are not tools for retirement savings. They are designed solely to help pay higher education expenses.
Because the purpose of an Education IRA is so different from traditional and Roth IRA’s, the advantages are also unique. Earnings on the funds in an Education IRA will be tax free if they are used to pay for higher education expenses before the designated beneficiary reaches age 30. The earnings are taxable to the designated beneficiary (not the responsible individual or contributor) if they are withdrawn for any other purpose.
An Education IRA encourages a regular savings program for a child’s education. Persons, such a grandparents, can fund this type of savings and in many instances, funds can be moved from one family member’s account to another’s. Contact the Credit Union for more information.