INDIVIDUAL RETIREMENT ACCOUNTS (IRA's)
City of Firsts Community FCU offers a wide range of IRA products that will help make your retirement dreams come true. Unfortunately, there will not be enough for retirement if we just depend on Social Security, so if you aren't saving enough now, then IRA's may be the answer for a secure future.
- No minimum balance is required
- No monthly fees
- Contributions may be made in "lump sums" or by regular deposits to the
IRA shares throughout the year
- Dividends are paid monthly and accrued daily
- Effective April 1, 2006, National Credit Union Administration (NCUA) insured Credit Union retirement accounts such as Individual Retirement Accounts (IRA's) are insured up to $250,000. Under new rules, traditional and Roth IRA's at one Credit Union are now insured in the aggregate to $250,000. Retirement account insurance protection is separate and apart from insurance coverage on other Credit Union accounts.
TRADITIONAL IRA's offer tax-deferred earnings and the possibility for tax-deductible contributions.
- If you meet certain eligibility tests and you are under age 50, you can contribute up to $4,000 annually for 2005 through 2007. For owners age 50 or older, your limits increase to $4,500 for 2005 and $5,000 for 2006 and 2007.
- You must pay a 10 % tax on early distributions or withdrawals before age 59 1/2
- You may withdraw funds without penalty after age 59 1/2; however, you must begin taking required minimum destributions from your traditional IRA at age 70 1/2
- The 10% penalty for withdrawing IRA funds before you reach age 59 1/2
will be waived if you use the money for a first-time home purchase or for qualified post-secondary education expenses (withdrawal limit is $10,000). Other situations may apply.
ROTH IRA's- Created as part of the Taxpayer Relief Act of 1997 and originally called The American Dream IRA, the new Roth IRA has a lot of people excited. The Roth IRA is an account that features tax-free withdrawals for certain distribution reasons after a five-year holding period. Since Roth IRA contributions are nondeductible and taxed in the year they are earned, members who expect to be in a higher tax bracket when they retire may benefit more from a Roth IRA than from a Traditional IRA.
Roth IRAS's have two criteria for determining eligibility to contribute. Like traditional IRA's, the ROTH IRA requires the IRA owner to have compensation or be filing a joint tax return with a spouse who has compensation. To make a maximum contribution to a ROTH IRA, IRA owners may not have a Modified Adjusted Gross Income (MAGI) over $95,000 if they are single, or a joint MAGI of $150,000 if they are married and filing a joint income tax return.
For complete information on Traditional and Roth IRA accounts, please contact our IRA specialist at the Credit Union! |
