Individual Retirement Accounts (IRAs)

Your Credit Union offers Traditional, Roth and CESA (Coverdell Education Savings Accounts) IRA's

Traditional IRA - this account allows you to defer taxes on your contribution earnings until funds are withdrawn. You may also realize a tax deduction for the year contributed - consult your tax accountant for further qualifying information. You must be younger than 70-1/2 years old for the entire tax year and have earned income (or your spouse must have earned income).

Roth IRA - this account requires that the contributions be held for five years before allowing select tax-free withdrawals. Contributions to the Roth IRA are nondeductible. In addition to the earned income requirements, your MAGI (modified adjusted gross income) must be below the limits established.

This chart outlines contribution limits and MAGI guidelines.

CESA - The Coverdell Education Savings Account was formerly known as the Education IRA. Although contributions to this account are not tax deductible, income tax free and penalty tax free distributions may be made to pay qualified education expenses. Although compensation is not required to contribute to a CESA, MAGI may limit the amount of the contribution you may make. Please consult your tax accountant for more information.

Your credit union has information brochures available highlighting the basics of these accounts and to help in your decision as to which IRA is best for you. Also, check out the IRS website for publication #590, Individual Retirement Arrangements, and more information.