IRA ACCOUNTS

Your Savings Nest Egg Begins Here!
With high yields and flexible terms to fit your short and long term goals, our IRA accounts are certain to help make your retirement an enjoyable one.

Traditional IRA
An IRA is a smart way to save for retirement because the amount you contribute may be 100% tax-deductible, depending on your income and access to a retirement plan through your employer. If your workplace offers a 401(k), defined benefit or other tax-qualified retirement plan, your annual IRA contribution may or may not be tax-deductible. However, your IRA contributions and earnings will grow tax-deferred until withdrawn.

You can contribute to a Traditional IRA up to the year you turn age 70 1/2, at which time you must begin taking required minimum distributions from the account.

You can take penalty-free withdrawals from your IRAs once you reach age 59 1/2 or meet the circumstances listed below. Please note the amount you withdraw will be taxed as ordinary income at that time:

• The account holder has passed away (the distribution must go to a beneficiary or the account holder's estate)
• The account holder is permanently disabled
• The distribution is used for a qualified first-time home purchase (up to $10,000)

For the 2009 tax year, you can open an IRA with up to $5,000, or up to $6,000 if you are age 50 or over. Enjoy the peace of mind knowing your IRA balances are federally insured to $250,000 by the NCUA, a U.S. government agency. Click here for current rates. To open an IRA account today call (800) 328-LFCU.

Roth IRA
Beat the taxman in retirement. With a Roth IRA, you will pay no taxes on dividends or earnings and you're not forced to take distributions at age 70 1/2. Plus, unlike a Traditional IRA, you can continue to make contributions beyond that age. This means you can pass on more to your heirs. Unfortunately, not everyone is eligible to open a Roth IRA. Once your adjusted gross income reaches $105,000 if you're single or $166,000 if you're married, the amount you can contribute to a Roth IRA begins to decrease, reaching zero for those with an adjusted gross income of $120,000 (singles) or $176,000 (married).

For the 2009 tax year, you can open a Roth IRA with up to $5,000, or up to $6,000 if you are age 50 or over.

Beginning January 2010, the old rules for converting a Traditional IRA to a Roth IRA no longer apply. The previous income limit of $100,000 adjusted gross income has been lifted, so now more consumers are eligible to convert.

Reasons to Convert 
• You have the option to pay income taxes on the conversion amount over two years, instead of all at once. If you are young, you have time to potentially recoup the losses tax-free

• Roth IRAs have no requirement to take yearly minimum distributions at age 70½ 

• If you pass your Roth IRA to a spouse or heir, the assets will continue to compound tax-free

Reasons Not to Convert
• Don’t convert if you can’t pay the taxes without tapping your IRA. The money you use to pay the taxes will not benefit from tax-free compounding. Consider your options and your situation carefully before you decide to convert a traditional IRA to a Roth.

Consult with a financial advisor to determine what action is right for you.

Coverdell Education Savings Account
With college tuition on the rise, an Education Savings Account (ESA) is a great way to save for a child's future. An ESA allows tax and penalty free earnings when the money is used to pay for qualified primary, secondary, and higher education expenses. Grandparents, aunts, uncles and even friends may contribute to an account for any child who is under age 18.

Coverdell Education Savings Account Benefits:

• Contribute up to $2,000 per year for each child under 18
• The amount you contribute is not impacted by contributions you make to a Traditional IRA, Roth IRA, or employer-sponsored retirement savings plan
• If the plan is owned by a parent, it's considered a parental asset and therefore has a minimal effect on the amount of financial aid available to the child
• The contributions grow tax-free and the funds can be withdrawn tax-free as long as they are used to pay eligible schooling costs
• You are eligible to contribute if you're adjusted gross income is less than $95,000 if filing as single taxpayer, or $190,000 if married filing jointly. Limited contributions are allowed for single taxpayers earning up to $110,000 and married couples making up to $220,000

To learn more, please visit any branch or call (800) 328-LFCU.