An individual Retirement Account (IRA) is one of the best ways
to save for your future, regardless of income. Recent changes in
the IRA tax code have made this investment better than ever...and
PFCU offers a full range of IRA choices:
Traditional IRAs
Money that you contribute may be deductible on your annual income taxes and earnings are not taxed until the time of withdrawal. Withdrawals can be made without penalty once you reach that age of 59½, and you must begin withdrawing from your IRA account when you reach 70½.
Traditional
IRA contribution limits are::
Tax Years 2008 & 2009 - $5,000.
Those age 50 or older can make an additional $1,000 "catch-up" contribution per
year!
Roth IRA
You will pay taxes on your contributions before they are made, but in exchange for paying them now, you will not have to pay any taxes when you withdraw your money in retirement! You can also contribute at any age and earnings may be withdrawn after age 59½ without penalty.
After five years, withdrawal of the principal and earned dividends
is tax free for those age 59½ years or older.
Even if you have a pension plan your Roth IRA distributions
will be TAX FREE when made at retirement.
The Roth IRA offers a variety of penalty-free withdrawal options
BEFORE regular distribution begins.
Coverdell Education Savings Account (Formerly Education
IRA)...
This special savings program has been revised
to offer MORE tax-advantaged education benefits beginning in 2002.
A non-deductible account, it helps parents and others save for a
child’s elementary- and secondary-school education. Distributions
are tax free and penalty free if used for qualified education purposes.
And, as of 2002, the annual contribution limit has been increased
to $2,000 per child (regardless of the number of contributors).
Ask your tax advisor for up-to-date IRA details, and a recommendation
for which IRA is best for you. Then see PFCU for assistance opening
your account. Just stop by or call any office.
To open a PFCU IRA, please call (626) 440-7000, Ext. 317.
Use our Retirement Calculator to see
how much you need to save to retire!
IRA COMPARISON TABLE
Traditional IRA
Roth IRA
Coverdell ESA (Formerly
Education IRA)
Qualifications
Must have earned income and
not have reached age 70½ by the end of the year.
Must have earned income. There
are no age restrictions.
The designated beneficiary
must be an individual under the age of 18. Beginning in 2002,
the age 18 limitation will not apply to any designated beneficiary
with special needs.
Maximum Contributions
Taxable years 2008 & 2009 - $5,000
Taxable years 2008 & 2009 - $5,000
$2,000 per beneficiary.
Contributions do
not count against the limits for IRAs
Yes. Contributions up to the
limit are fully tax deductible if you are not an active participant
in a retirement plan. Otherwise, phaseout rules apply.
No.
No.
Penalties for Early
Withdrawal
None if:
• Over 59½
• Death or disability
• Qualified medical expenses
• Certain health insurance
• Qualified college expenses
• 1st time home purchase
(up to $10,000)
• Due to IRS levy
None if:
• Over 59½
• Death or disability
• Qualified medical expenses
• Certain health insurance
• Qualified college expenses
• 1st time home purchase (up to $10,000)
• Due to IRS levy
None if:
• For payment of qualified education
expenses
Required Distributions
Must begin by April following
year participant turns 70½.
Only after death of the
participant.
Must be complete 30 days after
beneficiary reaches age 30 or dies.
Contributions After Age
70
Not allowed.
Allowed.
Allowed.
Presented by the National Association
of Federal Credit Unions, an independent trade association representing
federally chartered credit unions nationwide.
