Individual Retirement Accounts (IRAs) let you augment your pension and Social Security income while potentially enjoying a break on your taxes. You can reduce your current tax bill by deferring income tax on the dividends the account earns until you begin withdrawals, usually after retirement when your tax rate may be lower. Part or all of the money you deposit may be tax-deferred, depending on your overall income and pension plan participation status.*
PrimeSource Credit Union offers both Traditional and Roth IRAs, which are available as a regular share (savings)investment or certificate (termed) investment. Each type has different advantages, call us today for assistance.
Like all your PrimeSource savings and investments, your funds are insured by the NCUA. IRAs are insured separately from your other non-IRA accounts up to an additional $250,000 for added protection of your retirement funds.
IRA Share Account
An IRA Share Account is similar to a regular share/savings account in that there is not a penalty* for withdrawal, and you can make deposits anytime (not to exceed your maximum IRS contribution limit).
*This does not refer to IRS penalties for early withdrawal before age 59
This account is perfect for payroll deductions/allotments.
The minimum to open an IRA Share Account is $50.
- No Annual Fee!
IRA Certificate Accounts
12, 24, 30, 48 and 60 month terms available.
Low minimum balance requirement of $500.
Maturity sensitive, i.e. earn more in dividends the longer the term.
Deposits to IRA Certificates allowed during the term. Remember you are still responsible for ensuring you do not exceed your annual contribution limit. Please call if you have questions.
No Annual Fee!
Traditional IRA Facts
In 2009, the maximum annual contribution is $5500 if under age 50 or $6500 if age 50 or over (or 100% of your earned income, whichever is less).
No “marriage penalty.” One spouse’s active participation in an employer provided pension plan (such as a 401K) does not affect the other spouse’s status for contribution deductibility.
IRS penalty-free withdrawals are allowed prior to age 59 for disability or when the funds are used for first-time home purchases (up to a lifetime limit of $10,000), and/or qualified higher education expenses.
- No Annual Fee!
Roth IRA Facts
The Roth IRA, like the Traditional IRA, has a maximum annual contribution limit of $5500 if under age 50 or $6500 if age 50 or over (or 100% of your earned income, whichever is less).
Contributions to a Roth IRA are not tax-deductible.
Your eligibility to contribute to a Roth IRA is not dependent on whether you are covered by a retirement plan at work.
Dividends grow tax-free.
Withdrawals of both contributions and earned dividends are tax-free after age 59, as long as the money has been in the account for five years.
Tax-free distributions from the Roth IRA are permitted prior to age 59 for disability and/or first-time home purchases (up to a lifetime limit of $10,000), as long as the money has been in the account for five years.
Unlike Traditional IRAs, the Roth IRA allows you to make contributions after the age of 70.
The Roth IRA does not require mandatory minimum distributions once you reach age 70.
Converting Traditional IRAs to a Roth IRA: You can convert your Traditional IRAs to a Roth IRA, using special rules developed by the IRS.
No Annual Fee!
Coverdell Education Savings Account
- If you want to help your child with their education, we can help you plan for it financially. A Coverdell Education Savings Account is designed to fund certain education expenses, such as tuition, books, room and board, and certain other needs. Coverdell Education Savings Accounts can be a safe, smart way to help pave the way to your child’s educational endeavors and success.
- Funds may be used to pay private elementary or secondary school expenses as well as vocational, undergraduate educational expenses. (Not applicable to public schools.)
- A Coverdell Education Savings Account has tax advantages that other savings plans don’t. Your earnings are tax-and penalty-free if withdrawals are used for qualified education expenses.*
- Each year, you can make nondeductible contributions of up to $2,000 per child to this type of account.
- Funds that aren’t used by the time your child turns 30 can be rolled into a Coverdell Education Savings Account for a sibling or other family member under age of 30.
- Earnings will accumulate tax-free and withdrawals may be tax-free if used for the school expenses, as explained above, until they reach the age of 30.
- If the child decides not to go to college or leaves school before all the funds are withdrawn, you can roll unused funds into the Coverdell ESA of another child in your family.
- The account must be established before the child’s 18th birthday and no contributions may be made on or after that birthdate; unless the IRS defines the child as having a physical, mental, or educational condition that requires extra time for them to complete their education.
*PrimeSource Credit Union does not provide tax advice, so please consult your tax professional.