IRA Accounts (Individual Retirement Accounts) IRA
accounts were established to provide a means for individuals to accumulate funds for their retirement. In doing so, members may create certain tax benefits for themselves. Ease the worry over how you will
live on your retirement and Social Security income by supplementing it through a savings program. You may be eligible to reduce your taxable income by making an IRA contribution. This is a two-fold winner for you. You save for your retirement years and receive a savings benefit
on your taxes now! Even though your entire IRA contribution is not tax deductible on your income taxes, the dividends earned in this account are deferred until withdrawn. This allows the account to grow and earn money which you do not have to claim as dividend income! A small payroll deduction each week can build up quickly. This gives you the benefit of saving for retirement without putting a strain on your cash flow in April. Recent legislation has increased the insurance coverage on certain retirement accounts, such as IRAs and Keoghs, up to $250,000. Be sure to check with to consult your tax preparer or tax adviser for more information on possible tax benefits.
 How much will my Roth IRA be worth at retirement?
How much will my Traditional IRA be worth at retirement?
Ways to invest:
You can invest in an IRA in two ways
IRA Payroll Account - Effortlessly have your IRA savings directly withdrawn from your paycheck and deposited into your IRA.
IRA Term Share Certificate
– An IRA Term Share Certificate allows you to invest in your IRA with
one lump sum. Perfect for investing gift money from graduations,
weddings and any other occasion where you may receive a sum of money
you would be best off investing.
IRA Types
There are four types of IRA accounts that members may choose to open:
•Traditional
•Roth
•Education (Coverdell)
•Health Savings Accounts (HSAs)
TRADITIONAL
Who can contribute?
Anyone under age 70 who has income from compensation (or who is filing jointly with a spouse who earns compensation).
How much can I contribute?
Total
combined contributions to Roth and Traditional IRAs up to
$5,000/year or 100% of compensation, whichever is less, if 50 or over
may contribute an additional $1,000.
Who can make deductible contributions?
- Single individuals not active in employer retirement plans.
- Single individuals active in qualified retirement plans with MAGI below defined limits.
- Married couples with neither spouse active in an employer retirement plan.
- Married individuals active in a qualified retirement plans filing joint tax returns with MAGI below defined limits.
- Married individuals not active in qualified retirement plans filing joint tax return with spouses who are, as long as MAGI is below defined limits.
What are the tax advantages?
Earnings grow tax-deferred until withdrawn. Contributions may be tax-deductible.
When can I withdraw without restrictions?
Withdraw 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 income
Payment to beneficiaries upon the owner's death
Payment of health insurance premiums while unemployed
ROTH
Who can contribute?
You are eligible if you earn compensation and your MAGI is less than the defined limits set by Congress. If your MAGI is too high to contribute the annual contribution limit, you may be able to make a smaller contribution.
How much can I contribute?
- You may be able to contribute up to $5,000.
- For owner age 50 and older, you may be able to contribute up to $6,000.
- Contributions cannot exceed compensation.
Who can make deductible contributions?
No one can deduct contributions.
What are the tax advantages?
Earnings are tax-deferred and withdrawals are tax-free if the account is open for five tax years and withdrawals are for a qualified reason (age 59 ˝, disability, death, or a first-time home purchase.)
Not required to start withdrawals at age 70 ˝.
When can I withdraw without restriction?
Regular contributions can be withdrawn tax-free and penalty-free at any time.
After the account had been open five tax years, earnings can be withdrawn tax-free and penalty-free for any or first-time home purchase.
EDUCATION (Coverdell)
Who can contribute?
Education
IRAs have the same eligibility requirements as Roth IRAs, except that
the contributor's income does not have to come from compensation.
Contributions are allowed:
Once
the beneficiary of the Education IRA reaches age 18. In any year that a
contribution is made to a state tuition program for the same IRA
beneficiary.
How much can I contribute?
No more than $2,000 total each year for all Education IRAs opened on each child's behalf.
Who can make deductible contributions?
No one can deduct contributions.
What are the tax advantages?
Withdrawals for qualified higher-education expenses are tax-free.
When can I withdraw without restriction?
Withdrawals
are tax- and penalty-free only for qualified higher-education expenses
(earnings are subject to tax and penalty for most other withdrawals).
Funds can be transferred from one child's account to another child in
the same family.
Health Savings Accounts (HSAs)
Health Savings Accounts (HSAs) are tax-friendly savings accounts that
allow you to build a fund for future medical expenses that insurance
may not cover. The best part is, the account is all yours and any
unused funds may be used to supplement your retirement savings.
Click Here For More Information About HSAs
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