IRA Accounts
Individual Retirement Account programs offered at ACU are Traditional,
Roth, & Coverdell Education Savings
Accounts. At your direction, deposits are invested in IRA share
savings, IRA Certificates of Deposit, and/or a Market Index CD.
Dividends on IRA shares are calculated on the daily balance and
paid quarterly. Additions to your IRA are at your convenience through
payroll deduction, direct deposits, direct transfers, or rollovers.
If you are retiring, transfer your qualified 401-K or pension plan
to our IRA program.
Stop by any of our four convenient locations
or call us at (563) 585-3737 or 1-800-928-4328 for information on
how you can stretch your retirement savings with new and improved
IRA's.
Alliant Credit Union does not provide tax or legal advice. You
should contact your tax or legal advisor for advice regarding your
situation.
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With a Traditional IRA, you can contribute up to $5,000 a year for 2011. Members 50 and over can make an additional $1,000 catch-up contribution for 2011. Traditional IRAs offer tax-deferred earnings and the possibility for tax-deductible contributions. These tax advantages make the traditional IRA a powerful tool in creating a balanced, long-term savings plan.
Who can make a contribution?
- Any person under the age of 70-1/2 who has earned compensation during the year for which a contribution is to be made.
- Any person under the age of 70 ½ who does not have earned compensation but does file a joint income tax return with a spouse who has earned compensation during the year for which a contribution is to be made.
Note: Earned compensation is defined as wages, salaries, tips, bonuses, or any other amount received from performing duties.
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A Roth IRA allows you to contribute up to $5,000 a year for 2011. Members 50 and over can make an additional $1,000 catch-up contribution for 2011. Unlike traditional IRA’s, contributions to a Roth IRA are never tax-deductible. This type of IRA is more flexible in that earnings can be withdrawn tax free when:
- The funds have been in the account at least five years AND one of the following conditions apply:
- You are older than 59 1/2
- You become disabled
- You die, and it's paid to your beneficiary
- You use the money for a first-time home purchase
($10,000 lifetime withdrawal limit per person).
Most contributions made to your Roth IRA can be withdrawn anytime, because you have already paid tax on the money you contributed.
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A Coverdell Education Savings Account allows you to save for your child's educational needs. Contributions are not tax-deductible, but earnings grow tax-free. There are no taxes or penalties on money withdrawn to pay for qualified education expenses. Qualified education expenses include tuition, fees, books, and equipment required for enrollment or attendance at nearly any post-secondary educational institution (public, nonprofit or proprietary). Certain room and board expenses may also qualify. Qualified expenses also include these same expenses for elementary education, secondary education, the purchase of computer technology, or equipment that is used by the beneficiary and the beneficiary’s family while the beneficiary is in school. Contributions are limited to $2,000 per year per child younger than age 18.
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A Health Savings Account (HSA) gives you more flexibility and control over your health care costs. That’s because it empowers you to make your own health care decisions.
You will be able to deduct your contributions to your HSA, and the account earnings will accumulate on a tax-deferred basis. Best of all, distributions from your HSA are tax-free if they are used for qualified medical expenses.
Opening your HSA
To open an HSA, you must select a high-deductible health plan. The deductible must be at least $1,200 for an individual plan and at least $2,400 for a family plan. The major advantage of a high-deductible plan is lower premiums.
Contributing to Your HSA
You must enroll in a high-deductible health plan before you can make HSA contributions. The maximum annual HSA contribution is the amount of your plan’s deductible. However, the contribution for 2011 cannot exceed $3,050 for an individual plan or $6,150 for a family plan. Any eligible individual over age 55 can contribute an extra amount of $1,000 for tax year 2011.
Account Balance Is Carried Over
Unlike contributions to a flexible spending account, the balance of your HSA at the end of the year is carried over to the next year. So you’re not placed in a position of having to “use it or lose it” each year.
Protection from Catastrophic Medical Costs
To be coordinated with an HSA in 2011, a high-deductible health plan cannot have out-of-pocket limits which exceed $5,950 for an individual plan or $11,900 for a family plan. The high-deductible health plan provides you with protection from catastrophic medical costs, and the HSA provides you with a source of funds to pay some or all of the costs not covered by the health plan.
Control and Flexibility
An HSA enables you to take control of your health care decisions. And since you are the owner of your HSA, it doesn’t matter what your job status is or whether your employer makes contributions to your plan. Your HSA will always follow you.
Alliant Credit Union does not provide tax or legal advice. You should contact your tax or legal advisor for advice regarding your situation.
Stop by any of our four convenient locations or call us at (563) 585-3737 or 1-800-928-4328 for all the details about how you can stretch your retirement savings with new and improved IRA's.
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