Individual Retirement Accounts
Prepare for the Future with LFCU
An Individual Retirement Account (IRA) is a personal savings plan that offers tax advantages to an individual who sets aside money for his or her retirement. Langley Federal Credit Union offers fixed rate accounts for terms of 12, 18, 30 and 60 months, as well as Flex IRAs. Our Financial Service Officers can give you more details, and help you complete the necessary forms.
Roth IRA
Contributions to a Roth IRA are not deductible. Distributions considered to be "qualified" generally are tax and penalty free. Tax and penalty free benefits make the Roth IRA the most exciting new personal savings option since IRAs were first permitted in 1975.
Even more exciting, once the account has been open for five successive tax years, owners may take tax-free distributions of earnings if they meet certain criteria. Taxable compensation is required and modified adjusted gross income limits apply. Certain lower income individuals may qualify for a non-refundable tax credit. Please check with your financial adviser for eligibility.
Traditional IRA
A Traditional IRA is easy to maintain, and typically offers two important tax advantages:
Every penny of the earnings in your Traditional IRA is 100% free from federal income tax until you withdraw it from your account.
You may be eligible to deduct your total annual Traditional IRA contributions on your federal income tax return.
Taxable compensation is required, and the individual must be under age 70-1/2 for the entire year to make a regular IRA contribution for the year. Certain lower income individuals may qualify for a non-refundable tax credit. Consult your tax adviser. Tax-deferred earnings, regular deposits, and the passage of time will help your money grow faster for retirement.
| Single Taxpayer | Married Taxpayer |
|---|---|
| Full deduction if you are not a participant in an employer-sponsored retirement plan and income requirements are met. | Full deduction if neither person participates in an employer-sponsored retirement plan and income requirements are met. |
| Full deduction if you are a participant in an employer-sponsored retirement plan and Modified Adjusted Gross Income (MAGI) for tax year 2009 is $55,000 or less. | Full deduction if you are not in an employer-sponsored retirement plan but are married to someone who is and your Modified Adjusted Gross Income (MAGI) is $166,000 or less for tax year 2009. |
| Full deduction if you and your spouse are participants in an employer-sponsored retirement plan and your joint tax return (MAGI) for tax year 2009 is $89,000 or less. | |
| Partial deductions could apply. Consult your tax adviser for more information. |
Contributions for tax year 2009 will be accepted through April 15, 2010. When making your annual Individual Retirement Account (IRA) contribution, whether by mail or in person, please indicate in writing the tax year (2009 or 2010) for which the contribution should be applied.
| IRA Contribution Limits | ||
|---|---|---|
| Tax Year | 2009 & after |
* Cost of living adjustment (COLA) is made in $500 increments.
** Cost of living adjustment (COLA) applies only to $5,000 contribution limit as above,not to the extra $1,000 contribution limit that is available to individuals age 50 or older. |
| Under age 50 |
$5,000+COLA* | |
| Traditional IRA age 50-701/2 |
$6,000+COLA** | |
| Roth IRA age 50 & over |
$6,000+COLA** | |
Consult with your tax adviser for IRA contribution eligibility rules. LFCU members must be 18 years of age to open an IRA. Members who withdraw from their IRA investment before the expiration of the specified term are subject to an LFCU penalty. You may make annual contributions to Traditional and/or Roth IRAs as large as $5,000 for tax year 2009 — $6,000 if you are 50 or over. You may have both a Traditional IRA and a Roth IRA, but the combined contributions in any tax year are limited to a total of the contribution limits as listed.
