Who is eligible to contribute to an IRA?
Every individual who has earned income or he/she must file a joint federal income tax return with a spouse who earns compensation during the year. The person must be under the age of 70 1/2 and must not reach 70 1/2 at any time during the year for which the contribution is being made. At 70 1/2 you must start taking a required minimum distribution. See chart below.
TRADITIONAL IRA CONTRIBUTIONS
|Tax Year||Single or head of household IRA owner who is an active participant||Married couple (and couple lived together at least part of year)|
|Joint tax return||Individual tax return|
|IRA owner is an active participant||IRA owner is not an active participant; spouse is an active participant||Either IRA owner or spouse is an active participant|
|Individual MAGI||Joint MAGI||Joint MAGI||Individual MAGI|
|2013||$58,000 - $68,000||$92,000 - $112,000||$173,000 - $183,000||0 - $10,000|
Are IRA earnings, such as interest and dividends, tax-deferred?
All the earnings you accumulate in your IRA remain tax-sheltered until withdrawn.
Must I contribute the full amount each year?
No. You can contribute any amount your budget allows, either in one or more contributions. If you choose, you need not make any contributions in a given year.
When can I make withdrawals?
An owner may make a withdrawal (Distribution) at any time (subject to withdraw limitations imposed by the credit union as part of the share or deposit agreement in which the IRA is invested). The tax consequences of taking a traditional IRA distribution depends on the age of the owner and the reason for the withdrawal.
Can I make withdrawals before 59 1/2 years of age?
There is a 10% penalty for withdrawing all or any part of the account before age 59 1/2, with the following exceptions:
Consult your tax consultant or Accountant to see if you qualify.
When are taxes paid on IRAs?
When you begin making withdrawals, you will be taxed on only the amount you withdraw each year on which taxes have not previously been paid. The remaining funds continue to accumulate tax-deferred earnings.
What is the deadline for contributing to an IRA?
You can open or make contributions to your IRA any time up to and including the due date of your tax return for the previous tax year, normally April 15th.
This document is for general information only and is not intended to provide specific advice or recommendations for any individual. We suggest that you consult your attorney, accountant, financial or tax advisor with regard to your personal situation.