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The Future is Tomorrow

It’s never too early to start saving for the future. UKRFCU offers a variety of IRA’s that put your money to work, so that one day you won’t have to. Open an IRA savings to invest in a risk-free, high-yielding retirement account and save money in a tax-advantaged way. Or watch as your savings add up with an IRA Share Certificate that offers a range of certificate terms, competitive rates.

*Member must have a General Membership.

0.50% APY*

*APY = Annual Percentage Yield. $50 minimum balance required on IRA Savings.

Types of IRAs

A Traditional IRA is a personal retirement savings plan that offers tax-deferred earnings and the possibility for tax-deductible contributions. These tax advantages make the Traditional IRA a powerful tool in creating a balanced, long-term savings plan.

Who can contribute? You can contribute if you (or your spouse if filing jointly) have taxable compensation. Prior to January 1, 2020, you were unable to contribute if you were age 70½ or older.

Are my contributions deductible? You can deduct your contributions if you qualify.

How much can I contribute? The most you can contribute to all of Traditional IRA is the smaller of:

  • For 2019, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.
  • For 2020, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.

What is the deadline to make contributions? Your tax return filing deadline (not including extensions). For example, you can make 2019 IRA contributions until April 15, 2020.

When can I withdraw money? You can withdraw money anytime.

Do I have to take required minimum distributions? You must start taking distributions by April 1 following the year in which you turn age 72 (70 1/2 if you reach the age of 70 ½ before January 1, 2020) and by December 31 of later years.

Are my withdrawals and distributions taxable? Any deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable. Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.

Exceptions to the 10% early distribution penalty tax:

  • Age after participant/IRA owner reaches age 59½
  • Death after death of the participant/IRA owner
  • Disability total and permanent disability of the participant/IRA owner
  • Education qualified higher education expenses
  • Medical amount of unreimbursed medical expenses (>7.5% AGI; after 2012, 10% if under age 65) and health insurance premiums paid while unemployed
  • Homebuyers qualified first-time homebuyers, up to $10,000
  • Levy because of an IRS levy of the plan
  • Equal Payments series of substantially equal payments
  • Automatic Enrollment permissive withdrawals from a plan with auto enrollment features
  • Military certain distributions to qualified military reservists called to active duty
  • Returned IRA Contributions if withdrawn by extended due date of return
  • Rollovers in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days

SEP IRA Contribution Limits – The contributions made to each employee’s SEP IRA each year cannot exceed the lesser of:

  • 25% of compensation, or
  • $56,000 for 2019 and $57,000 for 2020.

These limits apply to contributions made for employees to all defined contribution plans, which includes SEPs. Compensation up to $280,000 in 2019 and $285,000 in 2020, of an employee’s compensation may be considered.

If an excess SEP contribution is made, it may be treated as a regular Traditional IRA contribution and possibly could become an excess Traditional IRA contribution. The employee, not the employer, generally is responsible for correcting an excess SEP plan contribution.

For more information, please click here.

A Roth IRA was created to give members an option in addition to the Traditional IRA. Contributions to the Roth IRA are not tax deductible.

Who can contribute? You can contribute at any age if you (or your spouse if filing jointly) have taxable compensation and your modified adjusted gross income is below certain amounts (see 2020 and 2019 limits).

Are my contributions deductible? Your contributions aren’t deductible.

How much can I contribute? The most you can contribute to all of Traditional IRA is the smaller of:

  • For 2019, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.
  • For 2020, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.

What is the deadline to make contributions? Your tax return filing deadline (not including extensions). For example, you can make 2019 IRA contributions until April 15, 2020.

When can I withdraw money? You can withdraw money anytime.

Do I have to take required minimum distributions? Not required if you are the original owner.

Are my withdrawals and distributions taxable? None if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be taxable. If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.

Exceptions to the 10% early distribution penalty tax:

  • After participant/IRA owner reaches age 59½
  • Death after death of the participant/IRA owner
  • Disability total and permanent disability of the participant/IRA owner
  • Education qualified higher education expenses
  • Medical amount of unreimbursed medical expenses (>7.5% AGI; after 2012, 10% if under age 65) and health insurance premiums paid while unemployed
  • Homebuyers qualified first-time homebuyers, up to $10,000
  • Levy because of an IRS levy of the plan
  • Equal Payments series of substantially equal payments
  • Automatic Enrollment permissive withdrawals from a plan with auto enrollment features
  • Military certain distributions to qualified military reservists called to active duty
  • Returned IRA Contributions if withdrawn by extended due date of return
  • Rollovers in-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days

For more information, please click here.

A Coverdell education savings account (Coverdell ESA) is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses, but also to qualified elementary and secondary education expenses. There are certain requirements to set up a Coverdell ESA:

  • When the account is established, the designated beneficiary must be under the age of 18 or be a special needs beneficiary.
  • The account must be designated as a Coverdell ESA when it is created.
  • The document creating and governing the account must be in writing, and it must meet certain requirements.

Contributions:You may be able to contribute to a Coverdell ESA to finance the beneficiary’s qualified education expenses. Contributions must be made in cash, and they’re not deductible. Any individual whose modified adjusted gross income is under the limit set for a given tax year can make contributions. Organizations, such as corporations and trusts can also contribute regardless of their adjusted gross income. Contributors must contribute by the due date of their tax return (not including extensions). There’s no limit to the number of accounts that can be established for a particular beneficiary; however, the total contribution to all accounts on behalf of a beneficiary in any year can’t exceed $2,000.

Distributions: In general, the designated beneficiary of a Coverdell ESA can receive tax-free distributions to pay qualified education expenses. The distributions are tax-free to the extent the amount of the distributions doesn’t exceed the beneficiary’s qualified education expenses. If a distribution exceeds the beneficiary’s qualified education expenses, a portion of the earnings is taxable to the beneficiary. Amounts remaining in the account must be distributed when the designated beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. Certain transfers to members of the beneficiary’s family are permitted.

You should receive a Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530) from each of the Coverdell ESAs from which you received a distribution. Form 1099-Q should be made available to you by January 31, 2020.

For more information, please click here.

 

To open an IRA Savings Account or IRA Share Certificate, you must be a member of UKRFCU. You may use UKRFCU’s Share Certificates to increase your IRA savings. To see our current rates, click below.

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Disclosures

Read the full list of disclosures here.

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Financial Calculators

Calculate your future earnings with UKRFCU’s financial calculators.

Questions?

No. In order to open an IRA, you must be a Primary Owner of the account.

Yes! For more information please contact an IRA specialist at 215-725-4430.

Distributions from Roth IRA are available at any time. In order to withdraw and have it be tax-free, the Roth IRA must be open for 5 years and you must be either at least be 59 1/2 years of age, be unemployed due to disability, or be using the distribution for a first time home purchase.

Yes. A member can maintain both types of IRAs at the same time. You can make contributions to both types of IRAs in the same year, but your contributions to both cannot exceed the maximum contribution limit for all IRAs.

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