At Telco Credit Union, we offer Individual Retirement Arrangements (IRA) and certificate accounts. IRAs permit you to make tax-deferred contributions so that you are financially stable when you retire. Before opening an IRA account, it’s important to evaluate your financial needs. Consider what your Social Security benefits will be, and then calculate how much money you’ll need when you retire. You’ll want to look ahead and set yourself up for financial security.
What’s the difference between a Traditional and a Roth IRA? Knowing the difference between these two types of retirement accounts is important so that you can save as much money as possible for your retirement.
Who can contribute to these accounts? For a Traditional IRA, you can contribute if you have taxable compensation, but not after you are 70.5 years of age or older. For a Roth IRA account, you can contribute at any age if you have taxable compensation, or if your modified adjusted gross income is below a certain amount. Traditional IRA accounts are deductible if you qualify, whereas Roth accounts are not deductible.
The amount you can contribute to either of these types of accounts depends on the limits set by the IRS, but they are the same for both accounts. Similarly, the deadline to make contributions for both types of accounts is simply the deadline for your tax return filing. You can also withdraw money from both Traditional and Roth IRA accounts at any time. For Traditional IRA accounts, there are minimum distributions. This means you must start taking distributions by April 1 after the year you turn 70.5 years old and by December 31 in years after. For Roth IRA accounts, minimum distributions are not required if you’re the original owner of the account.
Are withdrawals and distributions taxable? For Traditional IRAs, any deductible contributions and earnings are taxable. For Roth IRAs, no withdrawals and distributions are taxable if it is a qualified distribution. If it is not a qualified distribution, then part of the withdrawal or distribution may be taxable. For both of these types of IRAs, there may be an additional tax for early withdrawals if you are under the age 59.5 years old (unless you qualify for an exception).
At Telco Credit Union, we offer both Traditional and Roth IRA accounts with no monthly fees. By using these types of IRA accounts, your earnings will grow tax-deferred until they are withdrawn, and your contributions are fully deductible. If your account has been open for five years with qualified reason on a Roth Account, earnings are tax free as well. Another benefit of opening an IRA account at Telco is that contributions can be withdrawn at any time, tax and penalty free. Roth accounts do not require distributions after you are 70.5 years old.
The requirements of opening an IRA account with Telco Credit Union include: being a Telco member, earning income from compensation, and depositing a minimum of $1,000. It’s that simple! Contact us at Telco to get started. Serving Eastern North Carolina, Telco Credit Union is a trustworthy and reliable way to save and earn money.