Savings & Investing

Individual Retirement Accounts (IRAs)

The future will be here sooner than you may think. Start saving for retirement and education expenses with an IRA.


 
 
IRAs are savings products designed by Congress to help Americans save for retirement or pay for their children’s education expenses. We offer a variety of these retirement products to meet the needs of our members: traditional IRAs, Roth IRAs and Coverdell Education Savings Accounts (ESAs). All IRA accounts earn competitive dividends. They are available as share accounts or share certificates.

IRAs are insured up to $250,000 by NCUA, separate from other savings accounts, and an additional $250,000 by American Share Insurance Company.

Traditional IRAs

This type of IRA can give you a tax break now, with contributions tax-deferred until withdrawal. Reasons to invest in a traditional IRA are as follows:

To grow your nest egg – Put money away tax-free now, and start taking distributions at any time when you are between the ages of 59 ½ and 70 ½. Early withdrawal penalties of 10% of your balance help motivate you to keep the money in the account long term.

For a first home purchase – You can withdraw up to $10,000 without penalty to apply the funds toward buying your first home.

To pay for college – Early withdrawal penalties are waived when you use the funds for qualified educational expenses as well. There is no dollar limit and you can use the money for tuition, fees, books and supplies at any post-secondary institution.

For medical costs – Certain medical expenses are also eligible for an exemption from penalties.

Roth IRAs

This type of IRA lets you pay taxes on your investment now and then withdraw your dollars tax-free later. It’s a good idea for people who plan to be in the workforce for several more years and expect to see their annual incomes grow. Reasons to invest in this type of IRA are as follows:

To prepare for a retirement – Since qualified withdrawals, including earnings, are tax-free, it’s a great tool for saving. Also, distributions are not required at a certain age.
 
For a first home purchase – You can still withdraw up to $10,000 without penalty to buy your first home, as long as you’ve had the money invested for five years or more.
 
To pay for college – Early withdrawal penalties are waived when you use the funds for qualified educational expenses as well. There is no dollar limit and you can use the money for tuition, fees, books and supplies at a post-secondary institution.

You can contribute to either of these IRAs in person, by check or through payroll deduction or automatic payments. You can also roll over funds from IRAs you have at other institutions. For answers to all of your IRA questions, call one of our IRA specialists today at 1-800-288-1080.

Coverdell Education Savings Accounts

A Coverdell ESA is a smart way to save for a child’s education, no matter what his or her age. You can continue saving until your child reaches age 18, or you can withdraw the funds earlier to pay for public or private K to 12 education expenses. Qualified expenses include tuition, tutoring, room and board and even computer equipment.

While your contributions are made with after-tax dollars, the earnings and withdrawals are tax-free when used for qualified education costs. And you or any of your family members can contribute to the account, up to the $2,000 annual limit.
 
A unique feature of this account is your ability to transfer funds from one child’s account to an ESA for another child in the same family. Also, contributions can be made on behalf of the same child to both a Coverdell ESA and a 529 plan.
 
To learn more about Coverdell ESAs call one of our specialists today at 1-800-288-1080. Contact your tax advisor for more information on the tax benefits of IRAs.
 
 


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