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It’s time to invest in your future.

What is an IRA?

An IRA is a personal tax-sheltered savings plan, usually set up by an individual to provide for his or her retirement.  Contributions to IRAs can be tax-deductible and, in some cases, earnings grow tax-free depending on which type of IRA you choose.

Who can contribute to an IRA?

If you have earned income or receive alimony, you can contribute to an IRA.  Income from other sources such as investment or inheritance does not qualify.  If you have a working or non-working spouse and you file a joint return, he or she can open a separate IRA and make contributions up to the allowable annual limit.  There is no minimum age for opening an IRA.

You can open or contribute to an IRA for a given year up until the due date for that year’s tax return (usually April 15th).

Which type of IRA is best for you?

There are two types of IRAs – traditional and Roth IRAs.  The IRA that’s best for you may depend on your annual income and whether you’re seeking a tax deduction or tax-free earnings. 

Traditional IRAs

With a Traditional IRA, the funds you accumulate enjoy tax-deferred earnings.  The amount you withdraw is taxed as ordinary income in the year you choose to take money out.  At that time, you'll probably have less income, and as a result will pay fewer taxes on your IRA withdrawals.

With a Traditional IRA, if you are under age 50 you can contribute up to $5,500 per year or 100% of compensation, whichever is less.  If you are age 50 or older, you can contribute up to $6,500 annually or up to 100% of compensation, whichever is less, and you can withdraw money any time without penalty if you meet any of the following criteria:*

  • You are over age 59½
  • You become disabled
  • You die and funds are paid to your beneficiary
  • Funds are used for a first home purchase ($10,000 lifetime limit)
  • Funds are used to pay qualified higher education expenses
  • Funds are used to pay health insurance premiums while unemployed
  • Funds are used to pay qualified medical expenses exceeding 7.5% of income

If you have a working or non-working spouse and you file a joint tax return, he or she can open a separate IRA account and contribute up to $5,500 annually if he or she is under age 50.  If your spouse is 50 or older, he or she may contribute $6,500.   

There are no income restrictions for Traditional IRAs.  However, if you or your spouse is an active participant in an employer-sponsored retirement plan, the extent that your contributions are tax deductible depends on your Modified Adjusted Gross Income and tax filing status as follows:

  • Full deduction for singles earning under $61,000
  • Full deduction for married couples filing jointly earning under $98,000
  • Graduated deduction for singles earning $61,000-$71,000
  • Graduated deduction for married couples earning $98,000-$118,000 
  • No deduction for singles earning over $71,000
  • No deduction for married couples earning over $118,000

You can contribute to traditional IRAs up to, but not including, the year you reach age 70½.  You must begin withdrawals no later than April 1st of the year following the one in which your reach age 70½.

Roth IRAs

Unlike contributions to Traditional IRAs, contributions to Roth IRAs are not tax deductible.  Instead, earnings grow tax-free and you pay no taxes when you withdraw the money provided it's been in the account at least five years and you meet any of the following criteria:

  • You are over age 59½
  • You become disabled
  • You die, and the funds are paid to your beneficiary
  • Funds are used for a first-time home purchase ($10,000 lifetime limit)        

The amount that you can contribute to a Roth IRA depends on your Modified Adjusted Gross Income as follows:*

  • If you are under age 50, you can contribute up to $5,500 or 100% of compensation and alimony, whichever is less.  If you are 50 or older, you can contribute $6,500 annually or 100% of compensation and alimony, whichever is less. 
  • Full contribution is allowed if Modified Adjusted Gross Income is less than $116,000 for singles.  Contributions phase out as Modified Adjusted Gross Income reaches $131,000.  Modified Adjusted Gross Income limits run from $183,000-$193,000 for married couples filing jointly. 

With Roth IRAs you don't have to begin withdrawing money at age 70½, as is the case with traditional IRAs.  You can leave your funds in your accounts, and earnings will grow tax free for as long as you like.

For a quick comparison of Traditional and Roth IRAs, please see the table below.

Traditional IRAs Roth IRAs
Maximum Contribution

Under age 50: $5,500 annually or 100% of compensation, whichever is less.*

50 and older: $6,500 annually or 100%
of compensation, whichever is less.*

Under age 50: $5,500 annually or 100% of compensation, whichever is less.*

50 and older: $6,500 annually or 100%
of compensation, whichever is less.*

Income Restrictions None. Singles can contribute the full $5,500 or $6,500 if applicable Modified Adjusted Gross Income is less than $116,000. Contributions phase out as Modified Adjusted Gross Income reaches $131,000. Modified Adjusted Gross Income limits run from $183,000 to $193,000 for married couples filing jointly.
Amount Deductible If you or your spouse is an active participant in an employer-sponsored retirement plan, the extent that your contributions are deductible depends on your Modified Adjusted Gross Income and tax filing status as follows: Full deduction for singles earning under $61,000 and married couples filing jointly earning under $98,000. Graduated deduction for singles earning $61,000-$71,000 and married couples earning $98,000-$118,000. No deduction for singles earning over $71,000 and married couples earning over $118,000. None.
Earnings Taxed Yes, upon withdrawal. Earnings grow tax free provided certain requirements are met.
Withdrawal Penalties

None as long as...

- You are over age 59 1/2 or

- You become disabled or

- You die, and funds are paid to your beneficiary or

- Funds are used for a first home purchase ($10,000 lifetime limit) or

- Funds used to pay qualified medical expenses exceeding 7.5% of income or

- Funds used to pay health insurance premiums while unemployed or

- Funds used to pay qualified higher education expenses.

None as long as...

- You are over age 59 1/2 or

- You become disabled or

- You die, and funds are paid to your beneficiary or

- Funds are used for a first home purchase ($10,000 lifetime limit)

Need to rollover retirement plan funds?

If you’re changing jobs or retiring, our knowledgeable staff can guide you through the process of rolling over your retirement plan funds, and will assist you in selecting an investment that will help you achieve your financial goals.

Save for college with Coverdell Education Savings Accounts.

These accounts allow you to save for a child’s education expenses by investing up to $2,000 per year per child under age 18.**

The amount you may contribute depends on your income as follows:

  • Singles can contribute the full $2,000 if income is less than $95,000.
  • Contributions for singles phase out as income reaches $110,000
  • Income limits run from $190,000 to $220,000 for married couples filing jointly

Contributions can also be made by estates, trusts, businesses and other non-person entities without income limitations.  However, contributions from all sources cannot exceed $2,000 per year per beneficiary.

Contributions aren’t tax deductible.  However, earnings grow tax free, and you pay no taxes or penalties on money withdrawn to pay for qualified elementary, secondary or post-secondary education expenses including tuition, room and board and other fees before the beneficiary reaches age 30.

You can contribute to a Coverdell Education Savings Account for a given year up to the due date for that year’s tax return (usually April 15th).†

Choose the investment that fits your needs.

Market Rate IRAs

  • Offer a high variable rate
  • Dividends compounded daily and paid monthly
  • No minimum investment amount
  • Additional deposits permitted at any time, up to your maximum yearly contribution
  • Deposits can be conveniently made through payroll deduction
  • Available as traditional and Roth IRAs and Coverdell Education Savings Accounts

Smart-Saver IRAs

  • Offer a fantastic variable rate
  • Dividends compounded daily and paid monthly
  • $10,000 minimum balance requirement
  • Additional deposits permitted at any time, up to your maximum yearly contribution
  • Deposits can be conveniently made through payroll deduction
  • Available as traditional or Roth IRAs

Investor's Choice IRAs

  • Offer a fantastic variable rate
  • Dividends compounded daily and paid monthly
  • $25,000 minimum balance requirement
  • Additional deposits permitted at any time, up to your maximum yearly contribution
  • Deposits can be conveniently made through payroll deduction
  • Available as traditional or Roth IRAs

IRA Certificates

  • Offer high fixed rates
  • Dividends compounded and paid monthly
  • $1,000 minimum balance requirement for traditional and Roth IRAs and Coverdell Education Savings Accounts

Looking for more investment options?

Additional investment options are available through the MEMBERS Financial Services Program located at Central Credit Union.††  The MEMBERS Financial Services Program offers a variety of investment options that complement the savings programs offered by the credit union.  For more information, follow the link below or call Brian Sims, the MEMBERS Financial Services Representative at (708) 649-6470.

Check the background of this investment professional on FINRA's BrokerCheck.

††Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor.  CBSI is under contract with the financial institution to make securities available to members.
Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution.
CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

FR-1873167.1-0817-0919

Saving is simple with payroll deduction.

Automatically deposit a portion of each paycheck into your account with payroll deduction.  For more information or to sign up for payroll deduction, please see your Human Resources Department or call Member Services at (708) 649-6410.

Manage your money at your convenience.

Use Central At Home, our free home banking service, to conveniently manage your money.  With home banking you can check balances, verify deposits, request check withdrawals, transfer funds and more. 

Your credit union savings are federally insured.

Your savings are federally insured by the National Credit Union Administration, a U.S. Government agency. 

Questions?

For more information, please call Member Services at (708) 649-6410.

*Listed contribution limits are accurate for 2015 contribution year.  Total applies for traditional and Roth IRAs combined. For more detailed answers to legal or technical questions, please contact your attorney and/or CPA.  **Contributions for beneficiaries over age 18 may be allowed for beneficiaries with special needs.  These qualified individuals may also withdraw funds for qualified education expenses after age 30. †In the year in which the beneficiary turns 18, contributions must be made prior to his or her 18th birthday.


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