IRAs
Individual retirement accounts (IRAs) still offer many taxpayers one of the best "shelters" for deferring taxes on some income. In addition, IRAs are an excellent savings tool for setting aside funds for your retirement years. IRAs give you the advantage of compounding, regularly adding earnings to your investment to make it grow.
T&I Credit Union offer three different IRA accounts to help you invest for your future. Look over the information and decide which one is best for you. If you would like more information regarding IRA accounts, contact T&I Credit Union and let them help you evaluate your options.
- Traditional IRA
A traditional IRA is a type of retirement plan that offer tax-deferred earnings, and the possibility for tax-deductable contributions. You can contribute to a traditional IRA if you earn compensation and you will not reach age 701/2 by the end of the year. If you file a joint tax return, you can treat your spouse's compensation as your own (except your combined contributions cannot exceed your combined compensation). All earnings in the traditional IRA are not taxed until they are withdrawn. The ability to defer taxes on the earnings, and to withdraw in a year when you may be in a lower tax bracket, can mean more after-tax dollars for your retirement.
- Roth IRA
The Roth IRA is ab individual retirement account created by the Taxpayer Relief Act of 1997. Unlike traditional IRAs, your contributions to a Roth IRA are never tax-deductible. However, the money in your Roth IRA, including earnings, can be withdrawn tax-free. Of course, you must conform to the plan provisions to get this tax-free advantage. You are eligible if you earn compensation and your income is less than limits set by Congress. A single filer who has modified adjusted gross income (MAGI) up to $95,000 can make the full Roth IRA contributions for that year. Each spouse filing a joint federal income tax return showing a MAGI up to $150,000 can make the full Roth IRA contributions for that year. Some people with higher MAGI may be able to make smaller contributions.
- Coverdell Education IRA
It's never too early to start saving for your child's education - especially when your funds could be growing tax-free in an Education IRA (now known as the Coverdell Education Savings Account). Unlike traditional IRAs, your contributions to an Education IRA are never tax-deductible. However, and Education IRA offers you the potential for tax-free withdrawals -- including earnings. Anyone who meets the income requirements can open and contribute to your child's Education IRA. This includes grandparents, aunts and uncles, family friends and anyone else who wants to pitch in to your child's education fund. You can make contributions to a child's Education IRA until he or she reaches the age of 18. Your withdrawals are tax-free is used for tuition, books, and other qualified higher-education expenses.
