IRAs - Solidarity Community Federal Credit Union

There are a lot of investment choices out there. But not many compare with the Individual Retirement Account (IRA).

What is an IRA? Boiled down to its essential components, an IRA is a personal retirement savings plan that can usually be funded monthly or annually.

You have many IRA options. Depending on your taxable income and where you plan to be at retirement, there’s an IRA for you. While there are several, the two main options are traditional and Roth IRAs.

Traditional IRAs are perfect for the investor wishing to think forward with their pre-tax dollars. And traditional IRA contributions may be tax deductible (see a tax consultant). Of course, there will be some taxes due when you begin to withdraw from your IRA at retirement.

Roth IRAs use after-tax dollars to help you invest in the future. Any returns made from a Roth IRA are yours to keep with no tax implications. Roth IRA contributions are not tax deductible.

The following table compares the two accounts:

Who can contribute?

How much can I contribute?

What are the tax advantages?

Roth IRA

Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation), with the following modified adjusted gross income from the federal tax form:

· Up to $114,000 for single filers

· Up to $166,000 for joint filers

· $5,000 for 2008

· For owners age 50 and older, your limits increase to $6,000 for 2008

· Cannot exceed compensation

· Reduces contributions that can be made to traditional IRAs

· Earnings are tax-free if account is open for five tax years and withdrawn for a qualified reason (age 59 ½, disability, death, first time home purchase)

· Not required to start withdrawals at age 70 1/2

Traditional IRA

Anyone under age 70 ½ who has income from compensation (or who is filing jointly with a spouse who earns compensation)

Anyone who has received a distribution from a qualified retirement plan and decides to roll over the proceeds of the plan into an IRA

· $5,000 for 2008

· For owners age 50 and older, your limits increase to $6,000 for 2008

· Cannot exceed compensation

· Reduces contributions that can be made to Roth IRAs

· Earnings grow tax-deferred until withdrawn

· Contributions may be tax-deductible

Solidarity offers both IRA Savings accounts and IRA Term Share Certificates. Check our rates here.