IRA Savings

Experts say YOU'LL NEED 70%-80% OF YOUR CURRENT INCOME IN RETIREMENT

Relying on Social Security will only provide a fraction of that income. To maintain a comfortable and secure retirement, creating a personal savings plan to maximize your earnings is more important than ever. An Individual Retirement Account (IRA) can provide the additional savings you'll need.

All Orange County's Credit Union IRA accounts offer no set-up, maintenance, annual, or distribution fee.

  • $25 initial opening deposit
  • Dividends are compounded daily and paid monthly on a balance of $100 or more
  • Deposits are federally insured by the NCUA up to the maximum amount allowed by the NCUA, currently $250,000. All IRA including SEP, NCUA deposits held at the same institution are aggregated and covered up to a total of $250,000.
  • Ability to select both deposit and investment products for your retirement assets

Should I open a Roth IRA? Traditional IRA ? SEP IRA? These are questions many taxpayers ask.

Generally, a Traditional IRA may be beneficial if you're eligible to make deductible contributions and expect your tax rate during retirement to be lower than it is today. On the other hand, a Roth IRA may be a wise choice if you expect your tax rate to be the same or higher during retirement. A SEP IRA is a retirement plan designed to benefit self-employed individuals and small business owners.

The answer depends on each unique situation, and a Financial Advisor can help you choose an IRA that's right for you.

Compare your IRA choices1

Traditional IRA

Roth IRA

SEP IRA

What is the contribution limit for 2016?

100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Roth IRA contributions

100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Traditional IRA contributions

Contribution to the account may not exceed the lesser of 25% of the employee's compensation or $52,000

What is the contribution limit for 2017?

100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Roth IRA contributions

100% of earned income up to $5,500 ($6,500 if eligible2 for a catch-up contribution) reduced by Traditional IRA contributions

Contribution to the account may not exceed the lesser of 25% of the employee's compensation or $53,000

What are the tax advantages?

Tax deferred3
Investment growth is tax deferred and you may be eligible for a tax deduction on your contributions. You won't pay taxes on deductible contributions or any earnings until you withdraw money.

Tax free4
Investment growth is tax free when withdrawn as part of a qualified distribution (as defined by the IRS).

Tax deferred3
Investment growth is tax deferred and you may be eligible for a tax deduction on your contributions. You won't pay taxes on deductible contributions or any earnings until you withdraw money.

Is my contribution tax deductible?

If you're covered by an employer-sponsored retirement plan, 2016 tax year contributions are fully deductible if your Modified Adjusted Gross Income (MAGI) is below $60,000 (single) and $96,000 (married, filing jointly). You'll get a partial deduction if your income is between $60,000-$70,000 (single) and $96,000-$116,000 (married, filing jointly). For 2017, the MAGI phase-out ranges are $61,000-$71,000 (single) and $98,000-$118,000 (married, filing jointly). If you're covered by an employer-sponsored retirement plan, but your spouse isn't, you may take a deduction for the contribution made to your spouse's IRA if, for 2016, your joint MAGI is no more than $181,000. The deduction is phased out for joint MAGI between $181,000-$191,000. For 2017, the deduction is phased out for joint MAGI between $183,000-$193,000. If neither spouse is covered by an employer-sponsored plan, the contributions are fully tax deductible, regardless of income level.

No. Your contribution is not tax deductible.

Yes. Up to contribution limits as stated above.

Is there an age limit for contributions?

Yes.You must be under age 70½ in the contribution year to contribute. However, as long as you have earned income and your spouse is under age 70½ in the contribution year, you may make a contribution to your spouse's IRA.

No.

/td>

No.As long are you have earned compensation you may contribute. However, if you are age 70 ½ or older you still must meet your required minimum distributions.

Are rollovers and transfers permitted?

Yes.You may roll over5 or transfer to and from other Traditional IRAs or qualified employer-sponsored plans.

Yes.You may roll over5 or transfer to and from other Roth IRAs. You may also convert a Traditional IRA or roll over an employer-sponsored retirement plan to a Roth IRA.

YYes.You may roll over5 or transfer to or from existing IRA, SEP IRAs, or qualified employer-sponsored plans.

What are the withdrawal rules?

Withdrawals you make before you turn 59½ are generally subject to a 10% IRS penalty. You may make certain withdrawals free of IRS penalties before you turn 59½, including withdrawals to help pay for a first-time home purchase (as defined by the IRS with a $10,000 lifetime limit) or for qualified higher education expenses (taxes apply to all earnings and all deductible contributions withdrawn). Other exceptions may apply. Distributions must begin by April 1 of the calendar year following the year in which you attain age 70½.

Earnings withdrawn as part of a qualified distribution are tax free4 and IRS penalty free. Qualified distributions are those taken after 5 years have passed since a Roth IRA was initially funded and the distribution is made: at age 59½ or older, upon death, for reason of disability (as defined by the IRS) or for a first-time home purchase (as defined by the IRS with a $10,000 lifetime cap). Withdrawals of contributions at any time are tax free and IRS penalty free. Similar to Traditional IRA rules, withdrawals for qualified higher education expenses and first-time home purchases prior to the 5-year holding period, are free of IRS penalties, even though they're not considered qualified distribution for purposes of taxation. Other exceptions may apply.

Withdrawals you make before you turn 59½ are generally subject to a 10% IRS penalty. You may make certain withdrawals free of IRS penalties before you turn 59½, including withdrawals to help pay for a first-time home purchase (as defined by the IRS with a $10,000 lifetime limit) or for qualified higher education expenses (taxes apply to all earnings and all deductible contributions withdrawn). Other exceptions may apply. Distributions must begin by April 1 of the calendar year following the year in which you attain age 70½.

1Information provided is as of September 2016.

2Must be age 50 or older by December 31 of the contribution year.

3Tax-deferred growth means the individual delays paying Federal income tax on earnings until money is withdrawn from the retirement plan.

4Tax free means free from Federal income tax.

5For withdrawals taken on or after January 1, 2017, the IRS now limits you to making only ONE 60 days IRA rollover withdrawal in any 12-month period regardless of the number of IRAs you own at one or more financial institutions. You may still make an unlimited number of transfers. Refer to IRS Publication 590 for full details.