|
INCREASE IN DEPOSIT INSURANCE FOR IRA'S....An IRA is an intelligent investment because of the tax advantages and how it can help you save for retirement. But there's a new reason to get an IRA at Brewer Federal Credit Union if you don't already have one. Your IRA is now insured up to $250,000, up from $100,000.
Individual Retirment Accounts
Invest in your future today. We offer a variety of IRA's that will meet your needs.
- Traditional
- Rollover
- Roth
- Coverdell Education Savings Accounts (ESA)
Investment options to choose from:
- IRA Share Account
- IRA Certificate Account
Benefits
- You may be able to defer taxable income, which reduces your income tax liability
- No annual or maintenance fees
- You can even set up payroll deduction to make it convenient to save for your future
For for information about IRA's click here
CHOOSE THE IRA THAT MEETS YOUR NEEDS
Know your IRA options using the quick guidelines for Traditional, Roth or Coverdell Education Savings Accounts (ESAs)
Traditional Individual Retirement Account (IRA)
Who can contribute?
o Anyone under age 70 ½ who has income from compensation (or who is filing jointly with a spouse who earns compensation)
o Anyone who has received a distribution from a qualified retirement plan and decides to roll over the proceeds of the plan into any IRA.
How much can I contribute?
o $4000 for 2005 2007
For owners age 50 and older, your limits increase to $4,500 for 2005; and $5,000 for 2006 and 2007
o Cannot exceed compensation
o Reduces contributions that can be made to Roth IRAs
Who can make deductible contributions?
o Single individuals, not active in employer retirement plans
o Single individuals active in an employer retirement plans with MAGI* of less than:
$45,000 (2005-2010)
o Married couples with neither spouse active in an employer retirement plan
o Married individuals active in employer retirement plans with joint tax returns showing MAGI of less than:
$70,000 (2005)
$75,000 (2006)
$70,000 (2007-2010)
o Married individuals not active in employer retirement plans with spouses who are, as long MAGI is $150,000 or less
What are the tax advantages?
o Earnings grow tax-deferred until withdrawn
o Contributions may be tax-deductible
When can I withdraw without restrictions?
o Qualified higher-education expenses
o First time home purchase**
o Age 59 ½
o Disability
o Qualifying medical expense exceeding 7.5% of adjusted gross income
o Payment to beneficiaries upon the owners death
o Payment of health insurance premiums while unemployed for 12 weeks or longer.
Roth IRA
Who can contribute?
o Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation, with the following MAGI:
UP to $95,000 for single filers
Up to $150,000 for joint filers
Reduced contributions allowed for higher incomes:
o Up to $110,000 for single filers
o Up to $160,000 for joint filers
How much can I contribute?
o $4,000 for 2005-2007
For owners age 50 and older, your limits increase to $4,500 for 2005; and $5,000 for 2006 and 2007
o Cannot exceed compensation
o Reduces contributions that can be made to traditional IRAs.
Who can make deductible contributions?
o No one can deduct contributions
What are the tax advantages?
o Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59 ½, disability, death or first time home purchase**)
o Not required to start withdrawals at age 70 ½
When can I withdraw without restrictions?
o Regular contributions can be withdrawn tax-free and penalty-free at any time
o After the account has been open five tax years, earnings can be withdrawn tax-free and penalty fee for any of these reasons: age 59 ½, disability, death, or a first-time home purchase**)
Coverdell Education Savings Account (ESA) ***
Who can contribute?
o Anyone who has MAGI:
Up to $95,000 for single filers
Up to $190,000 for joint filers
Some people with higher MAGI may be able to make smaller contributions
Contributions not allowed after the beneficiary reaches age 18 (except for special needs beneficiaries)
o How much can I contribute?
$2,000 per child each year
Limit applies to all Coverdell Education Savings Accounts (ESA) for the same child
o Who can make deductible contributions?
No one can deduct contributions
o What are the tax advantages?
Withdrawals for certain qualified education expenses re tax-free
Qualified education expenses include tuition, fees, books, computer equipment and technology required for elementary, secondary and post secondary education
A beneficiary may receive tax-free distributions from a Coverdell ESA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits.
o When can I withdraw without restrictions?
Withdrawals are tax-free and penalty-free only for qualified education expenses (earning are subject to tax and penalty for most other withdrawals)
Funds can be transferred from one childs account to an account for another child in the family.
(None of the above information is intended as tax advice. Please consult a tax professional).
*MAGI Modified Adjusted Gross Income from the federal tax form
**Lifetime limit for exemption on first-time home purchase is $10,000
***Formerly known as the Education IRA
|
