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Investment Retirement Accounts (IRAs)

The New Generation of IRAs Are Here!


The sky is the limit with an IRA (Individual Retirement Account) at Space Age Federal Credit Union. You can choose between a Traditional and Roth IRA.

A Traditional IRA

A Traditional IRA (an Individual Retirement Account other than a Roth IRA, SIMPLE IRA or Education IRA) is a special tax-deferred savings plan authorized by the Federal Government to encourage you to accumulate money for retirement.

Do I Pay Taxes on the Earnings?
No, because all the earnings you accumulate in your IRA remain tax-deferred until you make withdrawals from the account.

Am I Eligible to Contribute to an IRA?
Individuals who are under 70 ½ years of age for the entire tax year and have earned compensation or received alimony may contribute to a Traditional IRA.

How Much Is Deductible from My Taxes?
If you and your spouse are not covered by an employer-sponsored retirement plan, you will receive a full deduction regardless of your income. If you participate in an employer-sponsored retirement plan, your income and filing status will determine the amount that your contribution is deductible from taxes.

How Are Funds Taxed When Withdrawn?
The amount withdrawn is included as taxable income, generally all deductible contributions and all earnings.  If you have made nondeductible contributions, you will not have to pay tax on that portion. Consult your tax advisor.

When Can I Withdraw from a Traditional IRA?

You can withdraw funds from your IRA any time after you reach age 59 ½. Distributions taken prior to age 59 ½ are subject to a 10% early withdrawal penalty unless the distribution is:
•Made to a beneficiary due to the account holder’s death.
•Made to an account holder who has become permanently and totally disabled.
•Made as part of a series of “substantially equal” periodic payments.
•Used to pay for medical expenses in excess of 7.5% of the account holder’s AGI.
•Used to pay for health insurance premiums for participants unemployed 12 or more weeks.
•Up to $10,000 used for the first time purchase of a home.
•Used to pay for qualified higher education expenses.

Distributions must start by April 1st following the year in which the participant reaches age 70 ½. Failure to begin distributions at this point will impose penalties.

If I Die, What Happens to My Traditional IRA?
The entire amount of your IRA will be paid to your beneficiary or beneficiaries. They can determine the manner in which the account is paid.

Is My Traditional IRA Insured?

Yes, our IRA investments are eligible for insurance by an agency of the Federal Government, NCUA (National Credit Union Administration), up to $250,000. All IRA accounts can be fully insured up to $250,000 separately from any other non-retirement accounts you may have with us.

A Roth IRA

A Roth IRA is an individual retirement account to which participants are able to make annual nondeductible contributions.  Unlike a Traditional IRA in which your earnings are tax-deferred, Roth IRA earnings can be tax-free.

Can I Convert My Traditional IRA to a Roth IRA?
You may, with no income limits, however this is included as income and taxed as ordinary income.

When Can I Withdraw from a Roth IRA?
You may withdraw your Roth IRA contributions at any time, without being taxed or penalized. “Qualified distributions” may be withdrawn tax and penalty free. “Non-qualified” distributions may be taxable and subject to an IRS 10% early distribution penalty.

To withdraw from your Roth IRA penalty free, you must have been a participant in the Roth IRA for over five years, beginning with the first year in which the account was converted or a contribution was made AND...
•You have reached age 59 1/2 OR,
•The distribution is paid to a beneficiary due to your death.
•The distribution is paid following your becoming permanently and totally disabled.
•The distribution is paid as part of a series of “substantially equal” periodic payments.
•The distribution is paid to you for the first time purchase of a home up to $10,000.

The following characteristics are non-qualified, and distributions are taxable as ordinary income:
•You have not reached age 59 1/2.
•The distribution is used to pay for medical expenses in excess of 7.50% of your AGI.
•The distribution is used to pay for health insurance. premiums if you have been unemployed 12 or more weeks.
•The distribution is used to pay for qualified higher education expenses.

Ordering rules dictate that distributions from a Roth IRA come first from:
1.Annual Contributions
2.Rollover Contributions on a first in, first out basis (with the dollars that were included in income as a result of conversion coming out before nontaxable dollars)
3.Post-Contribution earnings

When Can You Open a Roth IRA?
You can open or fund your IRA any time until your federal tax return is due. Normally, April 15th of the following year, excluding extensions.

Must I Contribute Every Year?
No, you are not required to contribute each year.

Is My Roth IRA Insured?

Yes, our IRA investments are eligible for insurance by an agency of the Federal Government, NCUA (National Credit Union Administration), up to $250,000. All IRA accounts can be fully insured up to $250,000 separately from any other non-retirement accounts you may have with us.