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Individual Retirement Accounts
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| An IRA is a personal
savings plan that offers you tax advantages to set aside money for
your retirement or, in some plans, for certain education expenses or
first-time home purchase. Sentry Credit Union offers you a number
of IRAs to choose from, including Traditional, Roth, or Education.
Traditional IRAs
Traditional IRAs are powerful tools
in creating a balanced, long-term savings plan that will help
provide safety and security for you and your family for years to
come. Contributions may be deducted from your taxable income,
reducing the income taxes you pay now. At Sentry Credit Union
you can invest your money through an IRA Plateau Account or IRA
Certificate. Check out our rates and then request an IRA Plateau or IRA Certificate
Account Application today!
Roth IRAs
Roth IRAs offer members an easy and
safe way to plan for the future. Your contributions are not
tax-deductible but the earnings within the IRA are tax-free as long
as your funds have been in the account for at least five years and
you are either over age 59½, disabled, or buying a first home. At
Sentry Credit Union you can invest your money through an IRA Plateau
Account or IRA Certificate. Check out our rates and then request an IRA Plateau or IRA
Certificate Account Application
today!
Educational
IRAs
Educational IRAs (also known
as the Coverdell Education Savings Account) can help your children
attain their dreams of a college education. Although contributions
are not tax-deductible, your withdrawals (including earnings) are
tax-free if used for tuition, books, and other qualified
higher-education expenses. At Sentry Credit Union you can invest
your money through an IRA Plateau Account or IRA Certificate.
Check out our rates and then request an IRA Plateau or IRA Certificate
Account Application today!
Comparison Chart
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IRA FEATURES
QUICK COMPARISON CHART |
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Features |
Traditional IRA |
Roth IRA |
Coverdell Education Savings Plan |
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Who Can
Contribute? |
·
Anyone under age 70- 1/2 for the entire tax year with earned
income from compensation.
·
Maximum contributions of $3,000 annually for tax years 2002
through 2004.
·
"Catch-up" Contributions: Individuals age 50 and older who
have earned compensation will be permitted to make additional
"catch-up" contributions to Traditional and Roth IRAs. The
maximum "catch-up" contribution is $500 for tax years 2002
through 2005, and an additional $1,000 for 2006 through 2010.
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·
Married couples filing a Joint Tax Return with MAGI* up to
$150,000. Contributions are phased out for joint filers with
income between $150,000 - $160,000.
·
Contributors filing a Single Tax Return with MAGI* up to
$95,000. Contributions are phased out for single filers with
income between $95,000 - $110,000.
·
May make contributions after age 70 1/2 if compensation
earned.
·
Maximum contributions $3,000 annually.
·
"Catch-up" Contributions: Individuals age 50 and older who
have earned compensation will be permitted to make additional
"catch-up" contributions to Traditional and Roth IRAs. The
maximum "catch-up" contribution is $500 for tax years 2002
through 2005, and an additional $1,000 for 2006 through 2010. |
Effective
January 1, 2002, contributions up to $2,000 per taxable year
to benefit a child under the age of 18 may be made by:
·
Married couples filing a Joint Tax Return with MAGI* up to
$190,000. Contributions are phased out for joint filers with
income between $190,000 - $220,000.
·
Contributors filing a Single Tax Return with MAGI* up to
$95,000. Contributions are phased out for single filers with
income between $95,000 - $110,000. |
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What are the
tax advantages? |
·
A married person who is not an active participant in a
retirement plan, but whose spouse is an active participant
will be eligible for a fully deductible contribution to a
Traditional IRA if MAGI* is under $150,000.
·
Earnings compound tax-deferred until withdrawn, usually
outearning taxable non IRA investments. Earnings are then
taxed when withdrawn usually at a lower tax rate.
·
Contributions may be tax deductible if certain requirements
are met. |
·
Contributions can be withdrawn tax and penalty free anytime.
·
Earnings are tax free if account is open for five years and
withdrawn for one of the following qualified reasons:
- Death
- Age 59 1/2
- Disability
- First time home purchase
·
Not required to start withdrawals at age 70 1/2. |
Tax Free
Withdrawals
·
"Qualified higher-education expenses" (tuition, fees, books,
supplies, and equipment).
·
Elementary and secondary school expenses and any computer
technology or equipment that is used by the beneficiary and
the beneficiary's family during any of the years that the
beneficiary is in school. |
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When can
withdrawals be taken without penalty? |
·
Withdraw penalty free without incurring 10% IRS
premature-distribution penalty:
1. Upon reaching age 59 ½
2. Qualified educational expenses
3. First time home purchase (lifetime maximum of $10,000 per
individual)
4. Disability
5. Catastrophic medical expenses
·
Withdrawal of earnings and deductible contributions still
results in taxable income |
·
Contributions can be withdrawn tax and penalty free anytime.
·
Earnings can be withdrawn penalty free for any of the
following qualified reasons:
1. Age 59 1/2
2. Disability
3. Death
4. For first time home purchase (lifetime maximum of $10,000
per owner)
5. Education Expenses
6. Large medical expense & health insurance premium while
unemployed |
·
Contributions can be withdrawn tax and penalty free any time.
·
Earnings can be withdrawn tax and penalty free for qualified
educational expenses (withdrawal of earnings for other reasons
are subject to tax and penalty).
·
Funds can be withdrawn and rolled over into another Coverdell
Education Savings Account of another family member under age
30. |
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When must
required distributions begin? |
·
At age 70 1/2 |
·
Not required
|
·
All funds must be used by the time the child (beneficiary)
reaches age 30. |
Note:
Effective 1/1/02, contributions to a Roth IRA and Traditional IRA
combined may not exceed $3,000 annually including catch-up
contributions .
This chart
is for general information only and is not intended to provide
specific advice or recommendations for individuals. We suggest you
contact your tax advisor in regards to your personal IRA plan.
*MAGI = Modified Adjusted Gross Income
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