Perry Point Federal Credit Union

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INDIVIDUAL RETIREMENT ACCOUNTS

An Individual Retirement Account (IRA) is an excellent tool for retirement savings. Unlike most investments, depending on the type of IRA you choose, contributions may be tax deductible and will grow either tax-deferred or tax-free. Perry Point Federal Credit Union offers both a Traditional IRA and a Roth IRA. The National Credit Union Administration, a U.S. Government agency, insures all of your IRA deposits in our credit union up to $250,000. This is in addition to the $250,000 insurance on your non-IRA deposits.

We offer both an IRA Share Savings Account and IRA Share Certificates. The IRA Share Savings Account is the ideal account when you're just starting to save because there's no minimum balance required. It’s also good to use when you begin withdrawing from your IRA because it has no early withdrawal penalties as there are with IRA Share Certificates. Our IRA Share Certificates are available with terms of 6, 12, 18, 24, 30 and 36 months. They're an ideal way to save long-term because they offer a higher dividend rate than the IRA Share Savings Account. You must have a minimum balance of $500 to open an IRA Share Certificate. You can split your IRA between any combination of Traditional, Roth, IRA Share Savings, and IRA Share Certificates as long as you don’t exceed the maximum annual contribution limits as noted in the chart below.

Traditional IRA
A Traditional IRA is a type of retirement account that has been in existence since 1975. Traditional IRA’s 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.

Roth IRA
A Roth IRA is an individual retirement account created by the Taxpayer Relief Act of 1997. Named for former Senate Finance Committee Chairman William Roth, Jr., this IRA offers more incentives to boost your retirement savings, as well as more ways to use your nest egg.

CURRENT RATES

The following chart is a summary of the differences between Traditional and Roth IRA’s. For more details, click on the links below to view online brochures. The following information is not intended as tax advice. Please consult a tax professional. (MAGI refers to the Modified Adjusted Gross Income from your federal income tax return.)

	TRADITIONAL IRA	ROTH IRA
Who can contribute?	Anyone under age 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation). Anyone who has received a distribution from a qualified retirement plan and decides to move the proceeds of the plan into an IRA.	You are eligible if you earn compensation and your Modified Adjusted Gross Income (MAGI) is less than the defined limits set by Congress. Contribution and deductibility limits change frequently. Consult your tax professional regarding your individual circumstances. If your MAGI is too high to contribute the annual contribution limit, you may be able to make a smaller contribution.
How much can I contribute?	You may be able to contribute up to $5,000. For owners age 50 and older, you may be able to contribute up to $6,000. Contributions cannot exceed compensation.	You may be able to contribute up to $5,000. For owners age 50 and older, you may be able to contribute up to $6,000. Contributions cannot exceed compensation.
Who can make deductible contributions?	Deductible up to annual contribution limit: Single individuals not active in employer retirement plans. Single individuals active in qualified retirement plans with MAGI below defined limits. Married couples with neither spouse active in an employer retirement plan. Married individuals active in qualified retirement plans filing joint tax returns with MAGI below defined limits. Married individuals not active in qualified retirement plans filing joint tax returns with spouses who are, as long as MAGI is below defined limits.	No one can deduct contributions.
What are the tax advantages?	Earnings grow tax-deferred until withdrawn. Contributions may be tax-deductible.	Earnings are tax-deferred and withdrawals are tax-free if the account is open for five tax years and withdrawals are for a qualified reason (age 59 1/2, disability, death, or a first-time home purchase [lifetime limit for exemption on first-time home purchase is $10,000]). Not required to start withdrawals at age 70 1/2.
When can I withdraw without restrictions?	Withdraw penalty-free for any of the following reasons: Qualified higher-education expenses. First time home purchase (lifetime limit for exemption on first-time home purchase is $10,000). Age 59 1/2. Disability. Qualifying medical expenses exceeding 7.5% of adjusted gross income. Payment to beneficiaries upon owner’s death. Payment of health insurance premiums while unemployed for 12 weeks or longer.	Regular contributions can be withdrawn tax-free and penalty-free at any time. After the account has been open five tax years, earnings can be withdrawn tax-free and penalty-free for any of these reasons: Age 59 1/2. Disability. Death. First-time home purchase (lifetime limit for exemption on first-time home purchase is $10,000).
When must I start making withdrawals?	You must begin receiving required minimum distributions at age 70 1/2. The minimum distributions each year will be computed using an IRS formula. You are allowed to delay the first year's payment until April 1st of the following year, but you will receive two years' worth of payments in that year if you choose to delay.	You are not required to make withdrawals, however, minimum distributions must be made to your beneficiaries after your death.