IRAs

ira

Retirement can sneak up on you. Not in the sense that you unexpectedly wake up on a golf course one morning, but in the sense that poor financial planning can leave you unprepared. PFCU offers Individual Retirement Accounts to our West/Central Michigan members. All IRAs are insured through NCUA and designed to provide a more comfortable retirement.

If you have any questions or need help filling out the simple forms to establish an IRA, please visit us at any PFCU office. Experience your retirement with us!

Traditional IRA

Defer taxes on your earnings until they are withdrawn. Certain contributions are tax-deductible in the tax year for which they are made.

Qualifications: Must have earned income and not reached age 70 ½ by end of the year

Maximum Contributions: $5,500 if you are under age 50; $6,500 if you are 50 or older

Tax Status of Earnings: Tax-deferred until withdrawn

Contribution Restrictions: Yes, if you are an active participant in an employer retirement plan

IRA Early Withdrawal Penalties: Yes, except: 1. Over 59 ½ years and taking regular distributions; 2. Death or disability; 3. Qualified medical expenses; 4. Certain health insurance; 5. Qualified college expenses; 6. First-time home purchase (up to $10,000); 7. Due to IRS levy

Required Distributions: Must begin withdrawing by April following the year you turn 70 ½

Contributions after age 70 ½: Not allowed

Roth IRA

This nondeductible account features tax-free withdrawals for certain distribution reasons after a five-year holding period.

Qualifications: Must have earned income; no age restrictions

Maximum Contributions: $5,500 if you are under age 50; $6,500 if you are 50 or older

Tax Status of Earnings: Earnings grow tax-free

Tax Deduction: No

IRA Early Withdrawal Penalties: None if: 1. Over 59 ½ years and taking regular distributions; 2. Death or disability; 3. Qualified medical expenses; 4. Certain health insurance; 5. Qualified college expenses; 6. First-time home purchase (up to $10,000); 7. Due to IRS levy (There may be an additional time deposit withdrawal penalty.)

Required Distributions: Only after death of the participant

Contributions after age 70 ½: Allowed

Coverdell Education Savings Account (CESA)

Formerly known as the Education IRA, the CESA can be used to pay for higher education as well as qualified elementary school and second school expenses.

Qualifications: Designated beneficiary must be under the age of 18 (this limitation does not apply to any designated beneficiary with special needs)

Maximum Contributions: $2,000 per beneficiary (Contributions do not count against limits for IRAs)

Tax Status of Earnings: Earnings grow tax-free

Tax Deduction: No

IRA Penalties for Early Withdrawal: None, if used for payment of qualified education expenses (time deposit penalties may apply)

Required Distributions: Must be complete 30 days after beneficiary reaches age 30 or dies

Contributions after age 70 ½: Allowed

Our Wealth Management Financial Advisors can help you determine which option is best for your financial needs. Contact us today.