Langley Federal Credit Union. Spirit of community. Warmth of family. Pride of membership.

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.

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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.

For 2011, your Roth IRA contribution limit is reduced (phased out) in the following situations.

• Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $169,000. You cannot make Roth IRA contribution if your modified AGI is $179,000 or more.
• Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2011 and your modified AGI is at least $107,000. You cannot make a Roth IRA contribution if your modified AGI is $122,000 or more.
• Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more.

Traditional IRA

A Traditional IRA is easy to maintain, and typically offers two important tax advantages:

1. Every penny of the earnings in your Traditional IRA is 100% free from federal income tax until you withdraw it from your account.

2. 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.

For 2011, if you are covered by a retirement plan at work, your deduction for contributions to a Traditional IRA is reduced (phased out) if your modified Adjusted Gross Income (AGI) is:

• More than $90,000 but less than $110,000 for a married couple filing a joint return or a qualifying widow(er),
• More than $56,000 but less than $66,000 for a single individual or head of household, or
• Less than $10,000 for a married individual filing a separate return.

If you either live with your spouse of file a joint returen, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $169,000 but less than $179,000. If your modified AGI is $179,000 or more, you cannot take a deduction for contributions to a Traditional IRA.

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 2011 — $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.