The Future is Tomorrow

It’s never too early to start saving for the future. UKRFCU offers a variety of IRA’s that put your money to work, so that one day you won’t have to. Open an IRA savings to invest in a risk-free, high-yielding retirement account and save money in a tax-advantaged way. Or watch as your savings add up with an IRA Share Certificate that offers a range of certificate terms, competitive rates.

*Member must have a General Membership.

0.50% APY*

*APY = Annual Percentage Yield. $50 minimum balance required on IRA Savings.

Types of IRAs

A Traditional IRA is a personal retirement savings plan that offers tax-deferred earnings and the possibility for tax-deductible contributions. These tax advantages make the Traditional IRA a powerful tool in creating a balanced, long-term savings plan.

Contributions: A member must be under the age of 70 1/2 as of December 31 to make a regular contribution for that tax year. A member over the age of 70 1/2 may no longer make a current or future contributions to their plan, but could still make a prior year contribution. The most a member can contribute to all of their IRAs is the smaller of:

  • For 2018, $5,500 or $6,500 if they’re age 50 or older but the end of the year; or
  • For 2019, $6,000 or $7,000 if they’re age 50 or older by the end of the year; or
  • Their taxable compensation for the year.

The deadline to make contributions is your tax return filing deadline.

Distributions: Members can withdraw money from their IRA plan at any time. Distributions made prior to reaching the age of 59 1/2 are considered an “early distribution“, which is subject to an IRS 10% penalty. Members are required to make a minimum distribution at the age of 70 1/2. The member has until April 1st the following year to make that withdrawal.

Exceptions to the 10% early distribution penalty tax:

  • Age 59 ½
  • Death
  • Disability
  • IRS Levy
  • Substantially equal periodic payments
  • Medical expenses
  • Health insurance premiums following unemployment
  • First-time home-buyer expenses
  • Higher education expenses
  • Qualified reservist distribution

A Roth IRA was created to give members an option in addition to the Traditional IRA. Contributions to the Roth IRA are not tax deductible.

Contributions: A member can contribute at any age if they (or their spouse if filing jointly) have taxable compensation and if their modified adjusted gross income does not exceed the IRS limits. Contributions are not deductible. The most a member can contribute to all of their IRAs is the smaller of:

  • For 2018, $5,500 or $6,500 if they’re age 50 or older but the end of the year; or
  • For 2019, $6,000 or $7,000 if they’re age 50 or older by the end of the year; or
  • Their taxable compensation for the year.

The deadline to make contributions is your tax return filing deadline.

Distributions: Members are not required to make minimum distribution. There are two types of Roth IRA distributions: qualified and nonqualified.

  • Qualified distribution: Roth IRA distribution that is considered a qualified distribution, and therefore tax and penalty free, if both of the requirements are met.
    • The five-year period. The Roth IRA owner has five-year period for determining Roth qualified distributions. The five-year period begins on January 1st of the earliest year for which the individual made his/her first Roth IRA contribution or conversion to any Roth IRA. The five-year period ends December 31st of the fifth year and is met the next day, January 1st.
    • Exceptions to the 10% early distribution penalty tax:
      • Age 59 ½
      • Death
      • Disability
      • IRS Levy
      • Substantially equal periodic payments
      • Medical expenses
      • Health insurance premiums following unemployment
      • First-time home-buyer expenses
      • Higher education expenses
      • Qualified reservist distribution
    • Nonqualified distribution: A Roth IRA distribution that does not meet both of the qualified distribution requirements is a nonqualified distribution and may be subject to tax and penalty.

A Coverdell education savings account (Coverdell ESA) is a trust or custodial account set up solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses, but also to qualified elementary and secondary education expenses. There are certain requirements to set up a Coverdell ESA:

  • When the account is established, the designated beneficiary must be under the age of 18 or be a special needs beneficiary.
  • The account must be designated as a Coverdell ESA when it is created.

Contributions: You may be able to contribute to a Coverdell ESA to finance the beneficiary’s qualified education expenses. Any individual whose modified adjusted gross income is under the limit set for a given tax year can make contributions. Contributors must contribute by the due date of their tax return (not including extensions). There’s no limit to the number of accounts that can be established for a particular beneficiary; however, the total contribution to all accounts on behalf of a beneficiary in any year can’t exceed $2,000.

Distributions: In general, the designated beneficiary of a Coverdell ESA can receive tax-free distributions to pay qualified education expenses. The distributions are tax-free to the extent the amount of the distributions doesn’t exceed the beneficiary’s qualified education expenses. If a distribution exceeds the beneficiary’s qualified education expenses, a portion of the earnings is taxable to the beneficiary. Amounts remaining in the account must be distributed when the designated beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. Certain transfers to members of the beneficiary’s family are permitted.

To open an IRA Savings Account or IRA Share Certificate, you must be a member of UKRFCU. You may use UKRFCU’s Share Certificates to increase your IRA savings. To see our current rates, click below.

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Disclosures

Read the full list of disclosures here.

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Financial Calculators

Calculate your future earnings with UKRFCU’s financial calculators.

Questions?

No. In order to open an IRA, you must be a Primary Owner of the account.

Yes! For more information please contact an IRA specialist at 215-725-4430.

Distributions from Roth IRA are available at any time. In order to withdraw and have it be tax-free, the Roth IRA must be open for 5 years and you must be either at least be 59 1/2 years of age, be unemployed due to disability, or be using the distribution for a first time home purchase.

Yes. A member can maintain both types of IRAs at the same time. You can make contributions to both types of IRAs in the same year, but your contributions to both cannot exceed the maximum contribution limit for all IRAs.