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Individual Retirement Accounts (IRA's)

We offer both Traditional and Roth IRAs as regular savings accounts and CDs.

With an IRA, you can invest your money in a variety of savings and investments such as CDs (share certificates), mutual funds, and individual stocks and bonds.

You can have more than one IRA, even two accounts of the same type. But the more you have, the more you have to manage, so experts recommend keeping the number of accounts to a minimum. Rollovers also are possible from one IRA into another.

Here's an IRA summary. For more information, talk with an IRA specialist at our credit union.

Please note: PowerNet Credit Union does not provide tax advice. The information on this page was taken from the IRS website, and is not a substitute for the advice of an attorney or tax professional.

Traditional IRA

Offers tax-deferred earnings and possibly tax- deductible contributions if you meet the requirements. If you and/or your spouse actively participate in an employer-sponsored retirement plan, you can deduct contributions only if your income is below certain limits. If you're not participating in a retirement plan, your traditional IRA contribution is deductible regardless of income. Ask your credit union IRA representative for details.

You can contribute if you have taxable compensation and you will not reach age 70 1/2 by the end of the year. If you file a joint tax return, you can treat your spouse's income as your own.

You can contribute to a traditional IRA, an employer-sponsored retirement plan, and a Roth IRA in the same year.

When you withdraw from a traditional IRA, your withdrawal will be treated as taxable income.

If you make a withdrawal before age 59 1/2 you generally must pay a 10% tax on early distributions. There are exceptions, such as rollovers, so ask your credit union IRA representative for more details.

You must begin taking required minimum distributions at age 70 1/2.

Roth IRA

Contributions are not tax-deductible, however, you can withdraw contributions and earnings from a Roth IRA tax-free.

To contribute to a Roth IRA, generally you must have taxable compensation and a modified adjusted gross income below the IRS limit for that tax year. The IRS limit may be adjusted annually for inflation..

You can withdraw funds tax-free before retirement under certain conditions: if your funds have been in your account for at least five years, you're older than age 59 1/2, you buy a first-time home, or if you become disabled or die.

You're not required to start taking minimum distributions when you reach age 70 1/2 as with a traditional IRA. You can let your money continue to grow tax-free for as long as you like and can also pass it on with no income taxes to pay.

IRA Contribution Limits

The limit for 2017 is $5,500. This may be adjusted in the future - in $500 increments.

Those age 50 and older have a catch-up deal; they can contribute an extra $1000 a year above the general contribution limit.


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