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An IRA is a special savings plan established by the Federal government to help you accumulate funds for your retirement.
Every individual who has earned income or received taxable alimony can contribute to an IRA.
Traditional IRAs, Roth IRAs and Coverdell Education Savings Accounts are all available at Western Credit Union, either as a simple IRA Share Savings Account or as an IRA Certificate Account.
Let us assist you in finding the perfect IRA solution for you!
Call us today at 614.276.6589.
Traditional IRA
The classic IRA option gives you an easy way to begin building a systematic savings for retirement.
Who can contribute?
Anyone under age 70 1/2 who has income from compensation (or is filing jointly with a spouse who earns compensation)
Maximum contribution per year, for tax years
2005 - 2007 is $4,000 or 100% of your earned income, whichever is less (This maximum is the total of both the Traditional and Roth contributions combined)
Maximum contribution per year, for tax year 2008 is $5,000 or 100% of your earned income, whichever is less (This maximum is the total of both the Traditional and Roth contributions combined)
Maximum contribution per year, after tax year 2008 will be adjusted annually for inflation in $500 increments
Who can make deductible contributions?
Fully-deductible contributions:
- Single individuals not active in employer retirement plans (regardless of income)
- Single individuals active in employer retirement plans with a Modified Adjusted Gross Income (MAGI)* of $50,000** or less as of 2005.
- Married couples with neither spouse active in an employer retirement plan (regardless of income)
- Married individuals active in employer retirement plans with joint tax returns showing Modified Adjusted Gross Income (MAGI)* of $70,000** or less as of 2005.
- Married individuals not active in employer retirement plans with spouses who are, as long as Modified Adjusted Gross Income (MAGI) is $150,000 or less
Individuals with incomes exceeding the above limits may be able to deduct an amount that is less than the amount that can be contributed
What are the tax advantages?
- Earnings grow tax-deferred until withdrawn
- Contributions may be tax-deductible
When can I withdraw without restrictions?
Withdrawal penalty-free for any of the following reasons:
- Qualified higher-education expenses
- First-time home purchase***
- Age 59 1/2
- Disability
- Qualifying medical expenses exceeding 7.5% of adjusted gross income
- Payment to beneficiaries upon the owner's death
- Payment of health insurance premiums while unemployed for 12 weeks or longer
Roth IRA
The most talked about IRA of the 1997 changes is the Roth IRA. Interested in converting a traditional IRA to a Roth IRA? Call the credit union for details and income limitations.
Who can contribute?
Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following MAGI:*
- Up to $95,000 (single filers)
- Up to $150,000 (joint filers)
Reduced contributions allowed for higher incomes (up to $110,000 for single filers and $160,000 for joint filers)
How much can I contribute?
- $4,000 in 2005.
- Higher limit if age 50 or older.
- Cannot exceed compensation.
- Reduced by contributions to traditional IRAs.
Who can make deductible contributions?
No one can deduct contributions.
What are the tax advantages?
Regular contributions can be withdrawn tax and penalty free at any time.
When can I withdraw without restrictions?
Earnings are tax free if account is open for five tax years and withdrawn for a qualified reason (age 59 1/2, disability, death, or a first time home purchase***).
Not required to start withdrawals at age 70 1/2.
Coverdell Education Savings Account
This IRA allows you to save for any post-secondary education. But heed warning: an education IRA alone may not be enough to cover the cost of college. An education IRA should be seen as a start for college savings.
Who can contribute?
Anyone who has Modified Adjusted Gross Income (MAGI)
- Single filer: up to $95,000
- Joint income for filers:
For 2005 and later years: up to $190,000
Some people with higher Modified Adjusted Gross Income (MAGI) may be able to make smaller contributions
Contributions not allowed after the beneficiary reaches age 18 (contributions after age 18 allowed for special needs beneficiaries)
Contributions for 2001 cannot be made if a contribution is made to a state tuition program (does not apply in 2002 and later years)
How much can I contribute?
$2,000 per child for 2005 and later years
Limit applies to all Education IRAs for the same child
Who can make deductible contributions?
No one can deduct contributions
What are the tax advantages?
Withdrawals for certain qualified education expenses are tax free
Special needs beneficiaries can withdraw funds tax free to pay for qualified education expenses at any age
For 2005 and later years, qualified education expenses may include tuition, fees, books, computer equipment and technology required for elementary, secondary, and post secondary education
For 2005 and later years, a beneficiary may receive tax free distributions from an Education IRA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits
When can I withdraw without restriction?
Withdrawals are tax and penalty free only for qualified education expenses (earnings are subject to tax and penalty for most other withdrawals)
Funds can be transferred from one child's account to an account for another child in the family.
IRA Share Savings
IRA Share Savings Accounts, unlike certificate-based IRAs, have no maturity date, so your funds can be accessed more easily. You can open the account with a $100 deposit, and dividends begin to accumulate immediately. Payroll deduction into this account makes it easy to establish savings for retirement, and additional contributions can be made at any time through the mail or drive-up or lobby tellers. This account can also be used as a short-term roll-over account, or as a holding account until you determine your long-term retirement planning goals. Dividends are calculated on the average daily balance and are compounded and credited quarterly to the account.
IRA Certificates]
IRA Certificates can be opened with as little as $500 and help your retirement savings grow at a faster pace than the IRA Share Savings, as these accounts have a higher dividend rate. Dividends are calculated on average daily balance and are compounded and credited monthly. IRA certificates give you a great, risk-free alternative for your retirement savings, with additional return to you through competitive dividend rates.
Let us assist you in finding the perfect IRA solution for you!
Call us today at 614.276.6589.
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