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IRA's
Individual Retirement Accounts are very popular savings accounts for investors interested in saving for retirement. In addition to tax advantages, new tax law changes have made this option even more attractive to members
Compare the Traditional IRA and the Roth IRA
Features Traditional IRA Roth IRA
Contribution Eligibility Anyone under the age of 70 1/2 with taxable earned income Anyone with earned income (regardless of age). Eligibility is phased out for individuals with adjusted gross income (AGI) of $112,000 to $127,000 and joint filers with AGI of $178,000 to $188,000.
Maximum Annual Contribution(1)

For Tax Year 2013: $5,500 ($6,500 if you are 50 or older) or 100% of your taxable compensation for the year, whichever is lower.

When more than one IRA is owned, total contributions for the year may not exceed the maximum annual contribution limit.

For Tax Year 2013: $5,500  ($6,500 if you are 50 or older) or 100% of your taxable compensation for the year, whichever is lower.

Roth IRA contribution limits are reduced by contributions made to all other IRA's for the year.

Tax Deductibility of Contributions Full deduction for contributions if you are not covered by a retirement plan. Deductions for contributions may be reduced based on your filing status, participation in a retirement plan or if your receive social security benefits.

Contributions are non-deductible.

Contributions may be withdrawn tax-free and penalty-free when taken first from the non-taxable portion of the Roth IRA.

Tax Treatment of Assets Grows deferred (taxes payable on deductible contributions and on any earnings when withdrawn) Grows federally tax-free.
Tax Treatment of Withdrawals

Distributions of deductible contributions are taxed at ordinary income tax rates.

Distributions of any nondeductible contributions are tax-free.

Distributions prior to age 59 1/2 may be subject to a 10% early withdrawal tax penalty .

Distributions from a Roth IRA rolled over tax-free into another Roth IRA, qualified distributions (1) or distributions that are a return of regular contributions from a Roth IRA(s) are not included in your gross income.

Distributions from your Roth IRA that are not qualified distributions may be subject to tax and a penalty.

Exceptions to 10% early withdrawal tax penalty

For withdrawals prior to age 59 1/2:

  • Death -- Disability -- Part of a series of substantially equal periodic payments -- Certain medical expenses in excess of 7.5% of AGI -- Certain unemployment expenses -- Qualified higher education expenses -- First time home purchase (up to $10,000 per lifetime).-- Not more than the cost of your medical insurance.-- Qualified Distributions

You may not have to pay the 10% additional tax in the following situations:

  • You have reached age 59 1/2 -- Death -- Disability -- You are the beneficiary of a deceased IRA Owner -- Distributions are part of a series of substantially equal payments -- Certain medical expenses in excess of 7.5% of AGI --Certain unemployment expenses -- First time home purchase (up to $10,000 per lifetime) -- Distribution is due to an IRS query of the qualified plan.
Required Minimum Distributions

Distributions are required at age 70 1/2 and must begin by April 1 following the year of attaining age 70 1/2.

Minimum distributions must then occur annually by December 31 of each year.

None. Roth IRAs cannot satisfy minimum distribution requirements for a traditional IRA
Transfers, Rollovers and Roth Conversions

Assets from other retirement programs can be transferred tax-free to a traditional IRA including:

  • Trustee-to-trustee transfers
  • Rollovers (2)
  • Transfers as a result of divorce

Amounts from the following plans can be rolled over to a traditional IRA:

  • Another traditional IRA
  • An employer's qualified retirement plan for its employees
  • 457 (b) plan
  • 403 (b) plan

Assets from other retirement programs can be converted to a Roth IRA including:

  • Trustee-to-trustee transfers
  • Rollovers

Amounts from the following plans can be rolled over to a Roth IRA:

  • Another Roth IRA
  • An employer's qualified retirement plan for its employees (profit sharing, 401K, money purchase and defined benefit plans)
  • A 457 (b) plan
  • A 403 (b) plan
At MVCU, we offer personal retirement planning that can help take the guessing out of retirement planning and help you take control of your money.
Source: www.irs.gov

(1) A qualified distribution is any payment or distribution from a Roth IRA that is made after the five-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and the payment of distribution is: (a) made on or after the date you reach 59 1/2, (b) made because you are disabled, (c) made to a beneficiary or to your estate after your death, (d) one that meets the requirements of the first home exception up to $10,000 lifetime limit.

(2) Rollover contributions are considered a tax free distribution and cannot be taken as a tax deduction. Amounts rolled over tax free from one retirement plan to another are includible in income when distributed from the receiving plan; rollover distributions must be reported on your tax return.

 

 

 

Watch your IRA investments add up fast with our great rates at the Maumee Valley Credit Union. Not like the stock market, up one minute down the next.

IRA Share Certificates available for as low as $500
Call one of our offices today, 382-4071 or 872-1201.
Click Here for current IRA Rates
 

IRA's, a great way to save for your future

PRIVACY & SECURITY   |    FEES & DISCLOSURES
Monday, July 24, 2017
This institution is not federally insured, and if the institution fails, the Federal Government does not guarantee that depositors will get back their money. Members' accounts are not insured or guaranteed by any government or government-sponsored agency.