ALERT: Our Main Office will be CLOSED on SATURDAYS this summer, beginning Saturday May 27th through September 2nd. Our Botany Village Office will remain open during its regular business hours.

INDIVIDUAL RETIREMENT ACCOUNTS (IRA)

Starting a reliable retirement plan is one of the most important steps in achieving financial stability for when you retire. Nova UA FCU is here to assist you in your retirement goals and needs.

Features and Benefits

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IRA accounts at competitive rates

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Interest compounded daily, deposited into your account monthly

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Tax advantages

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Maximum annual contribution limits apply

Traditional IRA

Traditional IRAs have been around since 1975. Its main benefit is tax deferral on contributions and earnings. Eligible amounts may be deducted from current taxable income. Deducted contributions and earnings will become taxable at the time of distribution.

Current IRA contribution limits are as follows:

Tax Year Under 50 50 and Over
2015 $5,500 $6,500
2016 $5,500 $6,500

Contributions to Traditional and Roth IRAs are aggregated and the total cannot exceed the lesser of taxable earnings for the year or the maximum contribution limit shown.

Distributions from Traditional IRA made prior to attaining age 59 1/2 are considered early distributions and are subject to 10% early distribution penalty, unless one of the following exceptions applies:

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Permanent disability

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Payment for certain health insurance, medical expenses, and higher education expenses

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Payment for a qualifying first home purchase (lifetime limit of $10,000 per taxpayer applies)

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Taking substantially equal periodic payments (SEPP)

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Conversion to a ROTH IRA

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IRS tax levy

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Payments made to IRA beneficiaries after IRA owner’s deat

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Qualified reservist distribution

As long as an IRA owner has taxable income contributions may continue until age 70½. Starting with the year in which the IRA owner attains age 70½, distributions are required and must be taken each year thereafter.

Roth IRA

Roth IRAs were introduced in 1998. They offered an attractive alternative to those who could not deduct contributions made to Traditional IRA due to their participation in an employer provided retirement plan. It is important to remember that a contribution to a Roth IRA is subject to phase-out limits if the modified adjusted gross income (MAGI) for single filers is between $116,000-$131,000 for 2015 and $117,000-$132,000 for 2016. For married couples, filing jointly $183,000-$193,000 for 2015 and $184,000-$194,000 for 2016. For married couples filing separately, $0-$10,000 for 2015 and 2016.

Instead of a tax deduction, individuals contributing to a Roth IRA accumulate earnings that may be tax-free if certain conditions are met. Other benefits of the Roth IRA are penalty-free access to principal amounts at any time, no need to take required minimum distributions (RMDs), and the possibility of making contributions past the age of 70½.

Current Roth IRA contribution limits are as follows:

Tax Year Under 50 50 and Over
2015 $5,500 $6,500
2016 $5,500 $6,500

Contributions to Traditional and Roth IRAs are aggregated and the total cannot exceed the lesser of taxable earnings for the year or the maximum contribution limit shown.

To be tax-free and penalty-free, the earnings on the Roth IRA must be qualified. Namely, they must be distributed after at least five years from the time the first contribution was made and the individual must either reach the age of 59½, use the funds for the first-time home purchase, be disabled, or the distribution is due to death.

Otherwise, early distribution of earnings from Roth IRA may be subject to tax and 10% early distribution penalty. Penalty may be waived if one of the following exceptions applies:

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Permanent disability

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Payment for certain health insurance, medical expenses, and higher education expenses

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Payment for a qualifying first home purchase (lifetime limit of $10,000 per taxpayer applies

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Payment for a qualifying first home purchase (lifetime limit of $10,000 per taxpayer applies)

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Taking substantially equal periodic payments (SEPP

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IRS tax levy

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Payments made to IRA beneficiaries after death

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Qualified reservist distribution

Coverdell Education Savings Account IRA

A Coverdell Education Savings Account allows parents to rest easy knowing that their financial contributions will help pay for higher education costs, as well as qualified elementary and secondary educational expenses. Unlike traditional IRAs, contributions to a Coverdell ESA aren’t tax deductible. However, a Coverdell ESA offers tax-free withdrawals – including earnings.

Share Savings account is required to open this account.

Share Policy: All accounts are insured up to $250,000 by NCUA. IRA accounts are insured for an additional $250,000 per account.

CURRENT-RATES

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