Personal, Loans, Access, and Investing, Policies, Disclosures

IRA


What is a Traditional IRA?

A Traditional IRA may be tax-deductible and the earnings grow tax-deferred. Traditional IRAs are a great place to roll over your employer qualified retirement savings.

Am I eligible for a Traditional IRA?

You can contribute to a Traditional IRA if:

  • You are under 70½ for the year the contribution is made
  • You have earned income equal to or greater than your IRA contribution

How much can I contribute?

Recent tax reform has increased the allowable annual contribution limits as follows:
 

Maximum Contributions:

  • TAX YEAR
  • ANNUAL LIMIT
  • 2017
  • $5,500.00 ($6,500 if you are age 50 or older)
  • 2018
  • $5,500.00 ($6,500 if you are age 50 or older)

What is a catch-up contribution?

For tax years 2008-2009 and after, individuals who attain the age of 50 before the end of the tax year may be eligible to make a "catch-up" contribution in addition to their normal contribution.
 

IRA Catch Up Contributions:

  • TAX YEAR
  • ANNUAL LIMIT
  • 2017
  • $1,000
  • 2018
  • $1,000

Are my Traditional IRA earnings taxable?

The earnings on your Traditional IRA are not taxable until withdrawn.

Are all Traditional IRA contributions tax deductible?

For many people, the benefit of contributing to a Traditional IRA is the tax deduction on their income taxes. You can deduct Traditional IRA contributions from your taxable income if you are not an active participant in an employer's retirement plan. Otherwise, "phase-out" rules apply depending on your annual income:
 

Deduction Limits and Phase-Out Limits:

*See IRS Publication 590 for more information on calculating Traditional IRA decisions
 

2018 & 2017 Contribution & Deduction Limits


*If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the "Single" filing status.

Should I contribute if I can't take a deduction?

Yes, there are many benefits to making an IRA contribution even if it's not tax deductible. Your non-deductible contribution:

  • Has already been taxed and will not be taxed again
  • Grows tax-deferred until withdrawn

If you are not eligible to deduct a Traditional IRA contribution, a Roth IRA may be a good option for you.

When can I withdraw my Traditional IRA assets?

You will always have access to your IRA funds. However, you are subject to tax and there is a 10% early distribution penalty unless you withdraw under the following circumstances:

  • You are over age 59½ (unless you receive equal payments over your life expectancy)
  • Death or disability
  • Qualified medical expenses
  • Qualified education purposes
  • First-time home purchase (up to $10,000.00)
  • Due to IRS levy

Am I ever required to withdraw my Traditional IRA funds?

Required distributions begin by April following the year a participant turns age 70½. Distributions are generally based on a person's life expectancy. Failing to withdraw the minimum required distribution can result in a penalty. CCCU can help you calculate your required distributions and even set them up to occur automatically.

Can I move my Traditional IRA or combine Retirement Savings?

You can move your Traditional IRA from one financial institution to another and you may "rollover" contributions transferred from employer-sponsored "qualified retirement plans" such as a 401(k).

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