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Individual Retirement Accounts

One of the greatest challenges facing Americans today is ensuring the financial well being and security of your family throughout your retirement years. With uncertainty over the adequacy of social security growing daily, it’s increasingly necessary to rely on your own savings plans and resources to support your future retirement plans.

Augusta Seaboard Community FCU offers a share savings IRA that pays a quarterly interest rate determined by the Board of Directors. A minimum of $100.00 is required in order to open your account. We also offer IRA Certificates accounts with terms of six months to 60 months.

TRADITIONAL IRAs

Traditional IRAs are valuable long-term savings tools that can provide safety and security for you and your family. Your contributions can be deducted from your taxable income, reducing the income taxes you are currently paying.

Traditional IRA Features:

  • Can be opened and funded without any employer participation
  • Contributions and/or earnings are tax-deferred earnings until retirement
  • Offer possible deductions based on retirement plan participation and income
  • Provide full accessibility to your funds; 10% early distribution penalty if younger than 59 ½ years
  • Are completely flexible as there is no minimum contribution in any year
  • Members under age 70 ½ years may contribute a maximum of $5K per year

Contributing to your Traditional IRA:

You can contribute to your IRA as long as you:

  • Have not reached the year in which you turn 70½, and 
  • Have earned income equal to or greater than the Traditional IRA contribution

You can contribute up to the lesser of:

  • 100% of earned income, or
  • $5K

Spousal Contributions:

Your spouse can fund your IRA with certain dollar limits on contributions and deductions.  To be eligible to establish a spousal IRA, the following requirements must be met:

  • You must be married and file a joint federal tax return
  • One spouse must have compensation or earned income equal to or greater than the IRA contribution
  • An IRA must be established for the non-compensated spouse
  • The spouse receiving the contribution must be under age 70½
  • Spouses may contribute $5K per taxable year, plus catch up contributions if eligible

Catch Up Contributions: 

IRA holders that reach 50 years of age prior to the end of the taxable year may be eligible to contribute an additional $1K to a Traditional IRA as a catch-up contribution.

 Deadline for Contributions:

You must make regular, spousal and catch-up IRA contributions to Traditional IRAs by the due date of your federal income tax returns, April 15th in most cases.

Nondeductible Contributions:

You can make nondeductible contributions if you are not eligible for a tax deduction or if you choose not to take a deduction. The combined total of deductible and nondeductible contributions cannot exceed the annual contribution limit of $5K, plus catch-up contributions if eligible, or 100% of earned income, whichever is less.

Tax Credits:

You might be able to receive the Saver’s Tax Credit, equal to a percentage of your IRA and retirement plan contributions up to $2K.  To be eligible for the tax credit, you must:

  • Be 18 years old prior to the end of the taxable year
  • Not be a dependent or a full-time student
  • Have adjusted gross income (AGI) within limits

Transfers & Rollovers:

You can move money from one IRA to another of the same type via a transfer or rollover.

A transfer is a direct movement between like IRAs, generally from one financial organization to another, but can occur between like IRAs at the same institution. You can make an unlimited number of transfers in a year. The transfers may be for all or any part of an IRA balance.

With a rollover, you, your surviving spouse beneficiary, or your former spouse actually receives the money or property through a distribution before rolling it into another IRA. The distribution that is eventually rolled into an IRA is treated as any other type of distribution at the time it is taken from the IRA. So the withholding rules still apply. The distributing financial organization reports the distribution to the IRS, and the receiving organization reports the rollover contribution to the IRS.

Accessibility to Funds:

Full access to your IRA funds is always guaranteed with a Traditional IRA. Taxable distributions taken from a Traditional IRA before the IRA holder reaches age 59½ are generally subject to a 10% penalty.  This is to discourage people from taking distributions prior to reaching age 59½.  The 10% early distribution penalty does not apply in the following situations:

  • 59½ year of age
  • Death
  • Disability
  • Medical expenses
  • Health insurance premiums following unemployment
  • First home purchase
  • Higher education expenses
  • IRS levy
  • Series of substantially equal periodic payments
  • Qualified reservist distributions

Mandatory Distributions:

Beginning in the year that a Traditional IRA holder turns 70½ years of age, distributions from a Traditional IRA become mandatory. You must begin taking money out of your IRA by April 1st following the year you turn 70½ years old.  These distributions are based on your IRA balance divided by your life expectancy, either singly or jointly with your beneficiary. If you fail to take your required distribution, you will be subject to a substantial penalty.

To view Augusta Seaboard Community FCU Credit Union’s Traditional IRA rates, please click here.

Certain restrictions and conditions apply. Not all tax advantages may be available to you. To determine your eligibility, the current status of applicable state and federal laws and the right plan for your needs, please consult your tax advisor.

 

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