An effective retirement plan usually combines a savings strategy with the added leverage of tax deferral. Most working individuals can realize tax benefits now by utilizing one of First Class American Credit Union’s retirement accounts to provide for a more secure future.
What is an IRA?
An Individual Retirement Account (IRA) is a separate account specifically established to receive funds intended for future use while also providing a current tax deduction. Both the original contribution and subsequent earnings are taxed when eventually distributed, presumably when the account holder is in a lower tax bracket. Earned income must equal or exceed the deduction, and taxable alimony can be considered qualifying income for purposes of an IRA.
IRA contribution limits are dependent on age.
- Up to $5,000 can be contributed yearly.
- If age 50 or over, an account holder can contribute $6,000.
- An additional $5,000 can be contributed for a nonworking spouse.
- If married and both are age 50 or over, $12,000 can be contributed.
Roth IRA Differences
A Roth IRA contribution is not tax-deferred and so is not taxed again when eventually distributed. A major difference is that the entire Roth distribution is tax-free, including the accumulated earnings. The annual contribution limits are the same as for a traditional IRA.
Simple IRA Small Business Plans
Small businesses can establish a savings incentive match plan for employees. A Simple IRA plan establishes a specific account for each qualifying employee, in addition to the owner. The plan either matches the contribution of each employee up to a specified percentage, or it contributes a fixed percentage to all qualified employees.
As one of the oldest credit unions in the state, FCACU is focused on helping members of the community. Our goal is to ensure that each and every member can build wealth by making sound financial decisions. An IRA is one of the cornerstones of retirement planning, and you can put our experience to work for you. If you’d like to set up an IRA with First Class American Credit Union, contact us today!