Individual Retirement Accounts

Individual Retirement Arrangements (IRAs) are excellent tools for retirement savings.  To earn dividends on your IRA contributions you can place your money in an IRA savings account (a $250 minimum deposit is required to open account) or utilize the benefits of an IRA Share Certificate (minimum 12 month certificate term with a $2,500 minimum deposit is required).  If you have an existing 401(k) or 403(b) account and need to rollover funds or transfer funds to an IRA, contact any Member Service Representative.

This information should not be construed as providing individual tax or legal advice.  Consult your own tax advisor or attorney regarding your individual situation. For more information about IRAs, refer to IRS Publication 590 or talk to a financial or tax professional.

 

Traditional IRA

A Traditional IRA is an account that provides the opportunity for your earnings to grow tax-deferred.  Earnings grow tax-deferred until withdrawn after age 59½ at which time they are taxed at your current rate.  Contributions may be tax-deductible.

You are eligible to participate if

  • you are under the age 70½ and have earned income equal to or greater than your IRA contribution amount
  • you contribute to an employer-sponsored plan like a 401(k) or 403(b); you are still eligible to contribute to a Traditional IRA
  • you have no earned income but your spouse earns enough income to cover your contribution as well as their own;  you must also jointly file your Federal income tax

How much can I contribute?

For 2015 and 2016, the maximum you can contribute to your IRA is the smaller of:

  • $5,500 ($6,500 if you’re age 50 or older), or
  • your compensation for the year, if your compensation was less than this dollar limit

Roth IRA

A Roth IRA is an account that provides the opportunity for your earnings to grow tax-free.  Any earnings can be withdrawn tax-free if the account has been open five years or more and the account holder is either 59½ years-old or older or is making a qualified distribution.  Your contributions (not earnings) can be withdrawn tax-free at any time.  There is no required minimum distribution (RMD) at age 70½.

Your are eligible to participate if

  • your modified adjusted gross income (AGI) does not exceed:
    2015/2016
    Single Tax Filers $131,000
    Joint Tax Filers $193,000
  • account owner must have earned income equal to or greater than their IRA contribution amount
  • you contribute to an employer-sponsored plan like a 401(k) or 403(b); you are still eligible to open a Roth IRA as long as you meet the eligibility requirements above
  • you have no earned income but your spouse earns enough income to cover your contribution as well as their own and their income (AGI) does not exceed the limits above, you can contribute to a Roth IRA

How much can I contribute?

For 2015 and 2016, the maximum you can contribute to your IRA is the smaller of:

  • $5,500 ($6,500 if you’re age 50 or older), or
  • your compensation for the year, if your compensation was less than this dollar limit

Simplified Employee Pension (SEP’s)

A SEP is a written plan that allows you to make contributions toward your employees’ retirement income.  Contributions may be made to a SEP IRA or a Traditional IRA.  You may not make SEP contributions to a Roth IRA.  A sole proprietor or a business that has adopted a SEP plan as their method of funding their employees’ retirement may make SEP contributions.  A sole proprietor is treated as both an employer and an employee.

This information is not intended as tax advice.  Please consult a tax professional.