Individual Retirement Account (IRA)
Tax benefits and compounding can save you more over time.
Open and maintain an account with as little as $25.
View the current dividend rate (compounded daily, paid monthly).
Set up Funds Transfer or Payroll Deduction contributions.
No charges or fees to open or service the account.
Manage your account on the go through any of our service channels.
What Is an IRA?
An individual retirement account (IRA) allows you to save for your future retirement through an account that offers tax advantages that can maximize your earning potential over time. The earlier you begin saving in an IRA, the greater your earnings may be through tax-advantaged compounding.We offer traditional, Roth and Simplified Employee Pension (SEP) IRAs as Share accounts to help you save for your future retirement. Credit Union Investment Services (CUIS), a wholly owned subsidiary of the Credit Union, also offers investment account IRAs.
Which IRA Is Right for Me?
The two most common types of IRAs are traditional and Roth. You can have both types of IRAs and have multiple accounts with different institutions.4 When thinking about which IRA is right for you, consider your income expectations, how you want your money to be taxed, and penalties and limitations that may be incurred for early withdrawals. Contact one of our representatives to help you determine which option best suits your needs.Are You Self-Employed?
If you are self-employed or work for a business that has adopted a SEP Plan, you may qualify for a SEP IRA. SEP IRAs are traditional IRAs that allow contributions from the employer, subject to certain restrictions. Contributions and earnings grow tax-deferred until withdrawn. You must start taking withdrawals when you reach your required minimum distribution age. Early withdrawals may be subject to taxes and a 10% penalty.Tax Considerations
Note: The information below is provided for informational purposes only. Consult your tax advisor for additional information regarding requirements and limitations.Eligibility Requirements to Open an IRA
- No minimum or maximum age limit
- Account owner or spouse must have earned income to make contributions
- No minimum or maximum age limit
- Account owner or spouse must have earned income to make contributions
- Must meet modified adjusted gross income (MAGI) restrictions for contributions
- SEP Plan must be established by employer or self-employed individual
- Employees who meet the following requirements must be included in the SEP Plan:8
- Age 21 or older
- Worked for the employer in at least 3 of the last 5 years
- Received at least $750 in compensation for 2023 ($650 for 2022)
- An employer can use less restrictive participation requirements than these listed, but not more restrictive ones.
If you participate in a SEP Plan, you can receive employer contributions to your SEP IRA and still make regular, annual contributions to a traditional and/or Roth IRA. However, any dollars you contribute to a SEP IRA will reduce the amount you can contribute to other IRAs.
Maximum Annual Contribution Limits
Lesser of 100% of earned income or your annual contribution limit. For Roth IRAs, your modified adjusted gross income (MAGI) may reduce your contribution limits.
Employers may contribute the lesser of 25% of your earned income or the SEP IRA annual contribution limit. Employer contributions do not affect the annual contribution amount you can contribute on your own behalf.
Deadlines to Contribute to an IRA
Traditional IRA
January 1 until the federal tax filing deadline of the following year
January 1 until the federal tax filing deadline of the following year
Until the federal tax return filing date, plus extensions
Deductions Limits for IRA Contributions
Dependent on tax filing status, participation in an employer plan and your MAGI. See the IRS website for more details.
Not eligible
Deductible to the employer only
Penalties and Tax Consequences for Early Withdrawals
- May be subject to ordinary income tax
- 10% penalty if withdrawn before age 59 ½ unless an exception applies
- Contributions can be withdrawn tax- and penalty-free at any time.
- Qualified withdrawals of earnings are tax-free if you meet the 5-year holding period requirement and one of the following is true:
- You are 59 ½
- You are disabled
- You are deceased
- The funds are used for a first-time home purchase, up to $10,000
- Non-qualified withdrawals are subject to ordinary income tax and a 10% penalty unless an exception applies.
- Subject to ordinary income tax
- 10% penalty if withdrawn before age 59 ½ unless an exception applies
Penalty Exceptions for Early Withdrawals
Owner reaches age 59 ½
Limited to $5,000 per birth or adoption
Owner is deceased; distributions made to beneficiary on account
Owner is totally and permanently disabled
Limited to amount of qualified higher education expenses
Distributions made as part of a series of substantially equal periodic payments (i.e., an annuity)
Up to $10,000 for purchase of first home
Distributions to the IRS in response to federal levy
For disasters with an incident period that began on or after January 26, 2021
- Owner’s principal residence must be in the declared disaster area
- Owner must have sustained economic loss as a result of the disaster
- Distribution must be made on or after the first day of the disaster and within 180 days
- The maximum amount that may be distributed with respect to any disaster is $22,000
- Amount of unreimbursed medical expenses that exceeds 7.5% of adjusted gross income (AGI)
- Health insurance premiums paid while unemployed
Qualified military reservists called to active duty
Owner has an illness or physical condition that can reasonably be expected to result in death in 84 months or less
If you have multiple IRAs at different institutions, you can combine the RMD amounts and take the total from any one or a combination of accounts. For IRAs held at the credit union, your monthly statement will provide you with the RMD amount. Use the RMD worksheets on the IRS website for more information on how to calculate your RMD.
Your first RMD must be taken by your required beginning date (RBD), which is April 1 of the year following the calendar year in which you reach age 73. All subsequent RMDs must be taken by December 31 of each year. You could incur a tax penalty if you do not take your RMD or the full amount required each year.
Retirement Funds at Another Financial Institution?
If you have funds from a former employer’s retirement plan, like a 401(k), or funds in an IRA at another financial institution, you can transfer or roll over those funds to a new or existing IRA at the credit union today. Contact your local branch or our 24/7 Member Services at (888) 732-8562 to get started.2 Rates and annual percentage yields (APYs) are variable and subject to change daily at the discretion of the Board of Directors.
3 No monthly maintenance fee if the minimum $25 account balance is maintained. A monthly maintenance fee of $1 will be charged if the account falls below $25.
4 You cannot exceed the IRS contribution limits for any given year and must meet certain other eligibility requirements.
5 Deductibility depends on tax filing status, participation in an employer plan and modified adjusted gross income (MAGI).
6 You must start taking distributions by April 1 following the year in which you turn 73.
7 While you may withdraw contributions tax-free at any time, withdrawal of Roth IRA earnings before you reach age 59 ½ and before the account is five years old may be subject to tax and penalties.
8 Eligibility exclusions may apply.