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It's never too early to start saving for your retirement. ECU offers several IRA options and can find the right one to fit your retirement goals! Consider an IRA, even if you are currently participating in your employer's retirement plan.
NOTICE OF WITHHOLDING
CHARITABLE CONTRIBUTIONS
KEEP YOUR BENEFICIARIES UP TO DATE
EARNED INCOME QUESTION
TRADITIONAL IRA
You are eligible to contribute to a Traditional IRA if you are younger than 70 1/2 for the entire tax year and you or your spouse has earned income.
This IRA allows you to defer taxes on earnings until withdrawn.
Contributions may be tax deductible in the year in which you make them.
ROTH IRA
Regardless of age, you are eligible to contribute to a Roth IRA if you or your spouse has earned income and your modified adjusted gross income (MAG) does not exceed a certain limit.
This IRA allows only non-deductible contributions, but distributions after a five-year waiting period can be tax free.
COVERDELL EDUCATION SAVINGS ACCOUNT (CESA)
This account is a good tool to use for paying qualified education expenses.
Contributions can be made by any interested party, but are not tax deductible; however, distributions used to pay qualified education expenses are federal income tax free and penalty free.
We recommend you consult a tax or financial advisor about your individual situation.
YOUR RETIREMENT PLAN
If you are not at your last job, what should you do with your employee-sponsored retirement plan?
You have several options, including:
1. Taking the money in a lump sum - carefully consider the tax consequences.
2. Leaving the money in your plan, if the plan permits.
3. Moving the money into a new plan, if the new plan allows such transfers.
4. Rolling over retirement plans into an IRA.
Review your choices carefully.
You should review your retirement plan distribution options with your tax professional. You may be making one of the most important financial decisions of your life - so make a good one. Our IRA specialists will be pleased to help you request your IRA rollover. Call us today!
NOTICE OF WITHHOLDING
If federal income taxes are currently being withheld from the Individual Retirement Account (IRA) payments you are receiving, but you do not wish to have taxes withheld, please notify Educators Credit Union. Please note, if you elect not to have withholding apply to your IRA payment or if you do not have enough federal income tax withheld from your IRA payments, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient.
If federal income taxes are not being withheld from your IRA payments because you elected not to have withholding apply, but you wish to change that election and have federal income taxes withheld, please notify an IRA Specialist at Educators Credit Union.
Charitable Contributions
Qualified charitable distributions are back.
It's too late to do anything for 2010, but for 2011 you can have up to $100,000 per person transferred directly from your IRA to a qualifying charity.
| The following stipulations apply when making these contributions: |
| You must be at least 70 1/2 at the time of the distribution; |
| The amount transferred will not be included as income on your 2011 tax return; |
| You will not get a charitable deduction for the amount transferred; |
| You cannot receive anything from the charity in return for the contribution; and |
| The charitable substantiation requirements will apply. |
MAKE SURE YOUR BENEFICIARIES ARE UP TO DATE
Have you updated your beneficiaries lately? As time goes by it is easy to forget to update your beneficiaries. There are many reasons why beneficiaries need to be updated. Death and divorce are the most common. Keep your beneficiaries up to date so that your money goes to the correct person, not the state.
To update your beneficiaries, come in and speak with an account representative.
EARNED INCOME QUESTION
What if I don't have earned income?
Q: I am a retiree and my wife and I have been talking about planning (even more than we already have) for our retirement in retirement. I want to know if I can contribute to a Roth IRA with no "W2" income, but instead with company pension income and taxable Social Security income? What are the rules on this?
A: IRA contributions can be made ONLY if you have earned income. The safe harbor is "W2" income. Pension and Social Security income are NOT considered earned income. If your spouse has enough earned income, a contribution can be made based on his or her income. Contributions can be made to a Roth IRA regardless of age (as long as you have earned income and income does not exceed certain levels). Contributions to Traditional IRAs cannot be made once you reach the year you turn 70 1/2.
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IRAs 