Open an IRA account and take advantage of tax-free and tax-deferred savings. The biggest news for retirement investors is the new Roth IRA and the Coverdell Education Savings Account (ESA). The combined total of the Traditional and Roth IRA's are insured up to $250,000.00 by the National Credit Union Administration. These retirement accounts are insured to $250,000.00 separately from any other deposits at the Credit Union.
Traditional IRA — The maximum contribution is $3,000 or 100% of earned income, whichever is less. Contributions are tax deductible and dividend earnings are taxed upon withdrawal. There are no penalties for early withdrawal if over age 59 1/2, or for a first time home purchase, higher education expenses, or for a health/disability emergency. There are no restrictions for those with employer retirement plans.
Roth IRA — The maximum contribution is $3,000 per individual. Contributions are not tax deductible. Dividend earnings are not taxed. Contribution restrictions are based upon the AGI of $95,000 for singles and $150,000 for joint returns. Above this AGI, phase-out begins and reaches a ceiling at $110,000 ($160,000 for joint returns). There are no penalties for early withdrawal if over age 59 1/2, or for a first time home purchase or health/disability emergency. Money must be in the account for a minimum of 5 years in all cases. There are no restrictions for those with employer retirement plans. Contributions can be made after age 70 1/2. You can convert your traditional IRA to a Roth IRA with special tax benefits in 1998 only.
Coverdell Education Savings Account (ESA) — The maximum contribution is $2,000 per year per child until the age of 18. Contributions are not tax deductible. Dividend earnings are not taxed. The AGI (Adjusted Gross Income) of contributor must be less than $95,000 for singles and less than $150,000 for married couples. There are no restrictions for those with employer retirement plans. Contributions are permitted after age 70 1/2 but the funds must be withdrawn or rolled over by the time the beneficiary reaches age 30 or be transferred to another beneficiary.
IRA ACCOUNTS
Contributions are not permitted after age 70 1/2. Contribution restrictions are based upon an AGI (Adjusted Gross Income) of $30,000 or less for singles and $50,000 a year or less for married couples.