It is never
too early to plan for a better financial
future! An IRA is a savings vehicle
designed to maintain your standard of
living throughout retirement. If you
work and are under age 70 ½ this year,
you can set up a Traditional IRA.
Traditional IRAs
If you do
not want to lock into a fixed rate, you
may set up a retirement plan in share
form. Features of Traditional IRA Shares
include:
No
minimum balance to open or earn
dividends
Dividends are earned on all balances
Additional deposits up to $4,000
annually may be made at any time
(You may start or stop automatic
payments at any time)
New
changes to the IRA contribution limit.
Anyone age 50 and over may now currently
deposit up to $5,000.00 annually.
With
a traditional IRA, whether deductible or
non-deductible, the taxes
are deferred on earnings
until you take distributions. You will
not pay any taxes on the interest you
earn on your IRA until you make
withdrawals. In addition, the
non-working spousal IRA contribution is
$4,000. If you are filing a joint
return, you have the opportunity to
invest up to $8,000.
Contributions to an IRA can be made
through direct deposit, mail or
by coming into our office.
Traditional IRA
Certificates
Traditional
IRA Certificates offer tax deferred
savings at a fixed rate. Other features
include:
Dividends are earned from the date
of deposit to date of withdrawal
Dividends are based on the average
daily balance and are credited to
the certificate monthly
Need
more information on IRAs?
Call
(717) 272-2210 or (800) 489-5328, extension
220
The Roth IRA
creates an opportunity to make
nondeductible contributions to an
account, where the earnings are tax-free
and penalty-free if the account is open
for five years and the account holder
meets any of the following guidelines:
They
are at least the age of 59 ½
years of age.
They
have become permanently
disabled.
If a
distribution is made to the
account beneficiary as a
result of their death.
They
are purchasing a new home
for the first time.
Contributions to a
Roth IRA are allowed at any age as long
as the IRA owner has compensation for
the tax year for which the contribution
is made. You may have a traditional IRA
and a Roth IRA, but the combined
contributions in any tax year can not
exceed $4,000, age 50 and over $5,000.
Unlike the traditional IRA, the money
you contribute has already been taxed,
therefore the principal amount is never
subject to taxes. In addition, you can
continue contributions after the age of
70 ½ and there is no requirement to
begin withdrawals at the age of 70 ½.
Taxpayers can
convert Traditional IRA funds to a Roth
Conversion IRA. LFCU keeps Roth
Conversion IRA funds separate from Roth
Contributory IRA funds.
PLEASE NOTE:
PLEASE CONSULT A TAX ADVISOR TO
DETERMINE IF THIS OPTION IS FOR YOU.
The
Taxpayers Relief Act of 1997 gave
taxpayers the ability to convert their
current IRA funds into a Roth if the IRA
owner’s single or joint modified
adjusted gross income is less than
$100,000. This converted money is kept
separate from a Roth Contributory IRA at
LFCU. The deductible money that is
converted will be taxed upon conversion.
Withdrawals may be subject to both tax
and penalty depending on whether the
reason for withdrawal is considered to
be a qualified distribution.
PLEASE
NOTE: PLEASE CONSULT A TAX ADVISOR TO
DETERMINE IF THIS OPTION IS FOR YOU.
The Coverdell
ESA's sole purpose is to allow parents,
grandparents, and other interested
persons to set up to $2000 aside each
year to help pay the higher-education
expenses of the child named on the
account. The account is set up and
reported under the child’s Social
Security number. Earnings accumulate
tax-free and withdrawals are tax-free if
used for vocational, undergraduate, or
graduate education expenses by the time
the person is 30 years of age.
his ESA allows up
to $2000 in nondeductible contributions
for a child under the age of 18.
Therefore, if both parents choose to
contribute to a Coverdell ESA, the total
of their contributions cannot exceed
$2000. If the funds in the Coverdell ESA
are not used by the child, the Coverdell
ESA may be rolled-over to another
child’s Coverdell ESA within the same
family..
PLEASE
NOTE: PLEASE CONSULT A TAX ADVISOR TO
DETERMINE IF THIS OPTION IS FOR YOU.PLEASE
NOTE: PLEASE CONSULT A TAX ADVISOR TO
DETERMINE IF THIS OPTION IS FOR YOU.
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