IRAs
An Individual Retirement Account makes a lot of sense when planning
your retirement or your investment future.
Your Social Security benefits and pension are not intended
to provide all of your retirement income. And planning ahead
to pay for an education, or to buy a house, or any future
goal is always wise.
Today's IRAs could possibly provide more tax benefits and
greater earnings than in previous years.
Your IRA deposits may be made in a lump sum or by regular
deposits through payroll
deduction or over the counter. You may also "roll
over" lump sum payments you receive from a qualified
retirement account; such payments may be due to retirement,
job termination, or termination of the plan. You are eligible
to roll all or part into an IRA in order to defer current
taxes.
Traditional IRA
Choose A Traditional IRA for long term retirement planning.
You don't pay taxes now on these retirement accounts, when
your income is high.
At retirement, you are able to take out your funds or roll
them over into another option. Taxes paid then are usually
considerably less, since your income will be less.
Here are some facts about Traditional IRAs:
- You must be under age 70-1/2 to be eligible for a traditional
Nondeductible IRA.
- Non-working spouses can now make fully deductible contributions
to an IRA, even if their spouse participates in a retirement
program, as long as their joint income does not exceed $150,000.
- You may be able to withdraw money before age 59-1/2 without
a penalty to purchase a first home (up to $10,000 maximum)
or pay qualified costs of higher education.
- Each wage earner's annual contribution to an IRA can be
$2,000 or 100 percent of earned income, whichever is less.
In a family with a nonworking spouse, the couple may be
eligible to deposit up to $4,000. The limit will depend
upon earned income and tax filing status. Check with your
tax preparer for more information.
- Interest earned on an IRA is tax-deferred until you withdraw
the funds, which become available when you reach age 59-1/2;
you must begin to withdraw at age 70-1/2 or face an Internal
Revenue excise tax penalty.
- Early withdrawal may incur a substantial tax penalty.
Tax Law IRA Provisions
The new tax law increased the amount you can contribute
to an Individual Retirement Account (IRA).
Traditional IRA
Traditional IRA tax-year contributions will increase from the
current $2,000 single taxpayer limit to progressively higher
limits according to this Internal Revenue Code 219(b)(5)(A),(C)
schedule:
| 2006-2007 |
$4,000 |
| 2008 |
$5,000 |
| 2009 |
$500 Increments indexed to inflation |
Eligible married couples filing jointly can also take advantage
of the increases.
Age 50+ Catch-Up Provision
Individuals who are age 50 and older before the end of the
taxable year, and before application of the Adjusted Gross
Income phase-out limits, can increase their IRA contribution
by:
- $500 for 2002 through 2005
$ 1,000 for 2006 and thereafter.
For more information about IRAs, speak to your financial
advisor.
Contact us to open your IRA today
and start saving for tomorrow.
Share Certificates (CDs) are also available as IRA investments.
An IRA Share Certificate requires a $500 minimum investment
and can be purchased for a term of 2.5 years. The rate varies,
so check with the credit union or this web site for the current
weekly rate.
When planning your retirement or investment future, be sure
to consider these higher yield certificates. They can be rolled
over at the end of their term into other IRA options, so start
planning now.
Remember that early withdrawals do incur penalties.
Current rates for IRAs are
posted in this site.
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