Individual Retirement Accounts
Retirement might be far down the road. Or it could be just around the bend. Either way, it's time to get serious about saving so you can make the most of life's next chapter.
There's a reason they call these the golden years
Everyone has a retirement dream. Things they want to do, places they want to go, moments they want to savor. One way to turn all these ideas into reality is with regular contributions to an Individual Retirement Account. At Commonwealth Credit Union, we offer Traditional and Roth IRAs, both of which can help boost your savings through potential tax advantages.
- $7,000 annual contribution limit ($8,000 if over age 50)
- Choice of savings accounts or IRA Share Certificates
- No front end charges or service charges
- Easy payroll deductions
- Quarterly statement provided, also accessible through Online Banking
- Receive monthly or quarterly checks when you reach the optional age of 59 1/2 or the required age of 70 1/2
- Federally insured separately from other accounts up to $350,000
Traditional IRAs
You could qualify for a tax deduction every year you contribute to a Traditional IRA. Consult your financial advisor.
- $7,000 annual contribution limit ($8,000 if over age 50)
- Annual contributions may be tax-deductible*
- Earnings accrue tax-deferred
- Fund withdrawals can begin at age 59-1/2
- Mandatory withdrawals at age 70-1/2
- Funds may also be withdrawn for first-time home purchase, education expenses or medical expenses**
- Federally Insured
Roth IRAs
With a Roth IRA, all withdrawals are tax-free. But you should consult your tax advisor for full details
- $7,000 annual contribution limit ($8,000 if over age 50)
- Contributions are not tax-deductible*
- Earnings accrue tax-free
- No mandatory withdrawal at age 70-1/2
- Funds may also be withdrawn for first-time home purchase, education expenses or medical expenses**
- Roth funds may be left tax-free to your heirs**
- Federally Insured
Coverdell Education Savings Account (ESA)
With tuition costs skyrocketing, families are looking for every possible resource to cover education costs. A Coverdell ESA offers many of the same tax benefits as a Roth IRA.
- Contribute up to $2,000 annually*
- Contributions are not tax-deductible*
- Earnings accrue tax-free
- Tax-fee withdrawals for qualified education expenses
- Funds may be used for college or vocational school tuition, housing, books, computers, and other supplies
- Funds may also be used for some primary and secondary education expenses
- Accounts are federally insured
To open an IRA or Coverdell Education Savings Account, please visit your local branch or give us at call at 800.228.6420.
IRA Changes Within Secure Act 2.0
The SECURE 2.0 Act, passed by Congress, significantly changes retirement account rules, including 401(k), 403(b), IRA, and Roth accounts, and related tax breaks. These changes aim to encourage more workers to save for retirement and could affect your personal finances. See below for some of the changes including:
- Age of Required Minimum Distribution (RMD) increased from 72 to 73.
- Individuals born in 1950 or earlier are unaffected by this change and must take any RMDs due for 2023 and years later.
- Saver’s Credit revised by making it government-paid matching contributions. Taxpayers can claim the credit on their tax return and the matching contributions will be deposited into a Traditional IRA or other pretax deferral account. Speak with your tax advisor or CPA about whether or not you qualify.
- Up to $1,000.00 per year in penalty free, repayable distributions are allowed to pay for unforeseeable or immediate personal or family emergencies. These distributions are also exempt from the 10% early distribution penalty.
- These are just the beginning of over 100 provisions made to IRAs and other tax-deferred accounts like 401ks and 403b and government 457b plans. Please refer to the link below for more info on SECURE Act 2.0 and how it impacts you.
*Subject to earned income guidelines. Consult your tax advisor for full details. **Consult your tax advisor for full details. Traditional and Roth IRAs are insured to $350,000. This includes $250,000 coverage provided by the NCUA, a federal government agency, and an additional $100,000 coverage by the Excess Share Insurance Corporation (ESI).
