Contributions to a Roth IRA are not tax deductible. However, withdrawals from a Roth IRA may be tax-free.
Married couples filing a joint tax return in the 2023 tax year with a Modified Adjusted Gross Income (MAGI) up to $218,000.00 and those filing individually with a MAGI up to $138,000.00 can make full contributions to a Roth IRA. Those with higher incomes may qualify for reduced contributions. Contributions can be made to a traditional IRA, a Roth IRA, or both for a given year, but the aggregate contribution may not exceed your annual compensation or $6,500.00 per year in 2023, whichever is less. If you are over age 50, you may qualify for an additional $1,000.00 catch-up contribution.
|Year(s)||Individual Contribution Limits||Additional Catch-up Contributions for age 50+|
The contribution limits for married couples are equal to two times the above limits in each plan year. For example, in 2023, a married couple, both of whom are over age 50 may contribute a total of $15,000.00.
Withdrawals from a Roth IRA are tax and penalty free as long as the account has been open for at least five tax years and you are over age 59½, disabled, or buying a first home. You may withdraw contributions tax and penalty free at any time, but earnings withdrawals are subject to income tax and may be subject to a 10% penalty tax if the above requirements are not met.
Why not rollover your 401K or transfer your IRA to an ABE IRA or IRA Certificate?
Contact your local branch for help in transferring your 401K OR IRA.
Insurance Coverage on Retirement Accounts are insured separately up to $250,000.00
Your Credit Union will pay as high a dividend rate as possible on IRAs, competitive with the interest rates paid on similar accounts at other financial institutions. The dividend rate on IRAs at your Credit Union will be based on the earnings of the Credit Union and may fluctuate according to the prevailing marketplace conditions. Dividends paid to Individual Retirement Accounts are generally tax deferred until you begin withdrawals.
At your Credit Union, there is no minimum contribution. You can contribute for 2022 tax year any amount up to the lesser of $6,000.00 or 100% of compensation received for any year. Compensation includes wages, salary, commissions, and fees. The contribution may be eligible for deduction from income at tax reporting time. Check with your tax adviser. These limits apply to a husband and wife, each of whom works and meets the IRA qualifications. If you are over age 50, you may qualify for an additional $1,000.00 catch-up contribution.
The contribution limits for married couples are equal to two times the above limits in each plan year. For example, in 2022, a married couple, both of whom are over age 50, may contribute a total of $15,000.00.
If you are employed and your spouse is not, you may maintain a separate Spousal IRA for your non-working spouse in addition to your own IRA. However, the maximum amount allowed as a deduction per year may not exceed $15,000.00 or 100% of compensation, whichever is less. To take the deduction for a spousal IRA, a joint return must be filed.
An IRA tax deduction for any given year may be taken for contributions made to your IRA from the beginning of that year through the due date for the income tax returns, April 15, of the following year. Contributions to your IRA account can be made in lump sum(s) or, if more convenient, throughout the year via systematic payroll deductions. Simply indicate the amount you wish to contribute to your IRA on each regular payday.
Special Tax Considerations:
There can be significant tax savings or material tax penalties in connection with participation in an IRA program. Always check with your tax planner or adviser when contemplating contributions or withdrawals.
The Credit Union is required by law to furnish you with an annual report on your IRA by May 31 of each year, for contributions made for the previous year.
You can borrow money to make your IRA contribution as long as your IRA is not pledged as security. Pledging the assets of the IRA account as collateral for a loan is considered the same as withdrawal from an IRA for tax purposes.
Early Withdrawal Excise Tax:
IRAs are intended to build savings for retirement. Withdrawals prior to age 59½ are penalized by a 10% Excise Tax. You are responsible for indicating your eligibility when requesting the withdrawal and stating the purpose if the withdrawal is before age 59½. Your Credit Union is required to report all withdrawals to the Internal Revenue Service.
You may receive funds from an existing IRA and roll them over tax free into an IRA roll-over account or amounts can be transferred for you. The rollover must be completed in compliance with strict rules in order to avoid penalties.
Required Minimum Distributions (RMDs): Unlike Traditional IRAs, Roths are not subject to required minimum distributions after age 72.