IRAs and Ouachita Valley Federal Credit Union: A Winning Combination
“Winning is never accidental. To win consistently, you must have a clear plan and intense motivation.” –Lou Holtz, legendary football coach
Great advice, especially when it comes to retirement. A retirement plan and determination will take you where you want to go–traveling, golfing, or relaxing by a lake. Whatever you have in mind for your golden years, a Ouachita Valley individual retirement account (IRA) is a safe harbor for your retirement funds. There are now more IRA types and maturity options at Ouachita Valley than ever.
Ouachita Valley offers 3 different types of Individual Retirement Accounts:
A traditional IRA allows your assets to grow tax-deferred, meaning you won’t pay any taxes on earnings until you withdraw the assets. For many investors, contributions to a Traditional IRA will also be tax-deductible.
Traditional IRA Key Features:
- Must be under age 70 1/2 with earned compensation to start an IRA
- Taxed deferred growth
- Max contribution limits:
- Catch up contributions for workers 50+
2013 – $6,500
- Possible tax deductible contributions
- Earnings and deductible contributions subject to tax upon withdrawal
- 10% early withdrawal penalty if you are under 59 1/2, exceptions are:
Death of account owner
Part of a series of equal periodic payments
First time home buyer
Higher education expenses
Health insurance premium payments for unemployed individuals
Medical expense payments in excess of 7.5% of an individual AGI
Minimum required distribution must start at 70 1/2
A Roth IRA allows your assets to grow federally tax free. Contributions can be withdrawn at anytime penalty and tax free. Contributions are not tax-deductible.
Roth IRA Key Features:
- You may contribute at any age as long as you have earned compensation subject to income limits
- Federally tax free growth
- Maximum annual contributions
2013 – $5,500
2014 – $5,500
- Catch-up contributions for workers 50+
2013 – $1,000
2014 – $1,000
- Contributions are not tax deductible
- Contributions may be withdrawn at any time without paying taxes or penalty.
- Earnings may be withdrawn federally tax free if the five year aging requirements and other conditions are met
- 10 % penalty on earnings withdrawn if you are under 59 1/2 and the withdraw does not qualify as:
Qualified higher education expenses
Qualified first home purchase (lifetime limit of $10,000)
Certain major medical expenses
Certain long-term unemployment expenses
Substantially equal periodic payments
There are no mandatory distributions
A savings plan for higher education. Parents and guardians are allowed to make non-deductible contributions to an Education IRA for a child under the age of 18.
The funds in an Education IRA can be withdrawn tax free when they are needed for educational purposes.
Key Features of a Coverdell (Education) IRA:
- Contributions are not tax deductible
- Withdrawals to pay qualified expenses are tax free. Qualified expenses are:
Tuition, Fees, Books, Elementary and Secondary School Expenses, Computer Technology or Equipment (including online access) that the beneficiary uses while in school, and Equipment required for enrollment or attendance at nearly any post-secondary school, Certain room and board expenses also may apply
- Contributions not to exceed $2000 per year
- Contributions allowed until the child reaches 18
- Child has up until age 30 to use the funds
Make OVFCU your IRA headquarters!
With competitive rates, payroll deduction to make contributions hassle free, insured deposits and no maintenance fees, your credit union is your “One-Stop” shop! Have questions? We have answers.
When you are ready to contribute to an IRA or if you would like to roll your IRA to the credit union, contact our IRA Specialist. We are here to help you reach your retirement goals with an IRA.