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Individual Retirement Accounts (IRA)

IRAs are a great way to save for both retirement and for a child’s higher education. Both events may seem in the distant future, but if you want to be financially ready, it’s never too soon to start these important savings vehicles.

There are many types of retirement accounts to choose from. Frequency of deposits, withdrawal options, types of investments, and tax-deferred vs. tax-free are just a few of the features you’ll need to evaluate when choosing an account. These investments can be complicated, but CUA has an IRA Specialist available to guide you through the decisions.

IRA Certificate Investing

It’s not enough to sock the money away. You need to maximize your earnings on your retirement dollars. CUA offers:

  • Competitive Rates
  • Dividends paid monthly on 12, 24, 36, 48, and 60 month IRA certificates.
  • Flex – IRAs available so that deposits can be made monthly.

Retirement Tip!

If your employer matches retirement deposits, or offers 401k programs, start as soon as you are eligible by your employer’s plan. The magic of compound interest is even bigger when you start young. And if your employer matches, say, 50% of your contributions, why not accept it…it’s “free” money. 

Traditional IRAs

This account lets you defer taxes on the earnings of your contributions until they are withdrawn. Certain contributions may be tax deductible in the tax year that they are made. If you are younger than 701/2 for the entire tax year and have earned income (or your spouse has earned income), you are eligible to establish a Traditional IRA.

Roth IRAs

The Roth IRA allows only non deductible contributions and features tax-free withdrawals for specific distribution reasons after a five-year holding period. Roth contributions are nondeductible and taxed in the year they are earned. If you expect to be in a higher tax bracket when you retire, you may benefit form a Roth IRA rather than a traditional one.

Roth Eligibility Requirements are:
  • You must have earned income (or your spouse must have earned income)
  • Your modified gross income (MAGI) cannot exceed certain prescribed limits.

Roth Features

  • Money contributed to a Roth IRA is taxable as income in the year it is earned.
  • There will be no taxes due on the earnings from a Roth IRA when it is distributed after meeting a five year holding requirement period and distributions are taken for the following reasons:
    • After age 59 ½
    • Permanent Disability
    • First-time home purchase
    • In the event of the owner’s death
  • Roth IRA distributions of contribution amounts are always free of penalty tax, regardless of the reason or timing.

2015 Annual Contribution Limits for Traditional & Roth IRAs

Standard Limit = $5,500
Catch Up Amount = $1,000 (ages 50 and over)
Total Contribution = $6,500

For a complete disclosure of IRA limits/requirements, please consult with a CUA Representative.

Education Savings Account

Coverdell Education Savings Account (CESA)

  • Purpose is saving for educational needs
  • Child must be a member of CUA and under age 18
  • No age restrictions with children having special needs
  • Tax-free withdrawals if used for education expenses
  • Total contribution cannot exceed $2,000 in any one year, no matter how many accounts have been established.

* Please see a tax professional for all tax-related questions