Note: This information is not intended as tax advice. Consult a tax professional regarding your specific circumstances.
There’s a lot more to having an IRA than just getting tax advantages. It’s your future, the key to your goals. You’ll never have to worry about taking chances with that future when your IRA is at the credit union. Your savings are secure, and your money will always be there when you need it. Here are the benefits of a credit union IRA:
Competitive rates
No annual maintenance fees
Insured deposits
Payroll deduction to simplify contributions
Can set up automatic contributions from savings or checking
Low minimum deposit requirements
Personalized answers to your questions
One-stop shopping for all your financial services
With a Traditional IRA, your contributions may be tax-deductible and earnings are tax-deferred, meaning you pay taxes on most IRA funds upon withdrawal. In contrast, Roth IRA contributions are always made with after-tax dollars, but qualified withdrawals are tax-free—including all your earnings!
As for similarities, the aggregate contribution limit to either a Roth or Traditional IRA is $4,000* per year, or 100% of your compensation (whichever is less). Persons over age 50 can make an additional "catch-up" contribution of $1000* to either IRA plan. And both offer the flexibility to use the funds not only for retirement, but also for a first-time home purchase and higher-education expenses.
*Contribution limit effective as of tax year 2006
Yes, you can contribute to a Roth, Education (now known as the Coverdell Education Savings Account), or Traditional IRA regardless of whether or not you have an employer-sponsored plan. In fact, IRAs are a great way to pad your savings.
While participation in a retirement plan doesn’t change how much you can contribute to an IRA, it can affect whether or not you’re eligible to deduct your contributions to a Traditional IRA on your tax return. But keep in mind that as long as you’ve earned compensation, you can always make nondeductible contributions to a Traditional IRA and benefit from tax-deferred earnings.
A simplified employee pension (SEP) plan is exactly
that—a simpler way for small businesses to offer a retirement plan to their
employees. A SEP plan allows you,
the employer, to make contributions to your own traditional IRA and those of
your employees instead of establishing a complex retirement plan.
SEP plans are inexpensive and easy to administer. Plus, your employees pay no taxes on their SEP accounts until they withdraw their funds.