IRAs (Individual Retirement Accounts)

IRA accounts have recently gained popularity due to some new and exciting changes to the rules/requirements governing IRA accounts. Union Trades FCU offers all types of IRA plans including the Traditional, Roth and Educational IRA programs.

Traditional
A traditional IRA program is an account that allows you to defer taxes on your earnings until you withdraw the funds. Based on your personal tax situation, you may receive a tax deduction for this type of deposit. You must start withdrawing funds the year you turn 70 ½.

Roth
This IRA program is gaining popularity because the account allows all earnings to grow tax-free in this account and there is no age that you must start distributions from this account. This IRA is not tax-deductible; however, it does offer some true advantages over a Traditional IRA program. One of the benefits for some is the provision for "qualified distributions". A qualified distribution from a Roth IRA means the account must have been opened for at least 5 years and you are either older than 59 1/2; disabled, or a first time home buyer ($10,000 lifetime withdrawal limit). Another benefit of the new Roth IRA is that there is no required distribution, so if you don’t need the funds you do not need to take any withdrawals from the program.

COVERDELL ESA IRA
This IRA account allows you to save for upcoming educational expenses for your children. The maximum that can be deposited into an Educational IRA per child from all sources is $2000 annually. The contribution is not tax-deductible. Instead, earnings grow tax-free and you pay no taxes or penalties on the money withdrawn to pay for qualified higher education expenses, such as tuition, and fees, before the child reaches age 30.

Because these accounts have many different features and the deposits are based on your personal tax situation, please consult your accountant or tax adviser before making any decisions.