IRAs

Save for Your Retirement with an IRA

Individual Retirement Accounts (IRAs) can help you:

  • save for retirement
  • save for your child’s education
  • reduce your taxes*

And, you can rest easy knowing that IRAs are federally insured up to $250,000 by the National Credit Union Share Insurance Fund.

Open an IRA today and start saving for your retirement. 



*Consult your tax advisor regarding how the various IRAs relate to your tax situation.

Roth IRA and Traditional IRA

  Roth IRA Traditional IRA
Who can contribute? You're eligible if you earn compensation and your modified adjusted gross income (MAGI)* is less than the limits set by Congress. If your MAGI is too high to contribute the annual contribution limit, you may be able to make a smaller contribution.  Anyone under age 70 1/2 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 may decide to roll over the proceeds of the plan into an IRA.
How much can I contribute? You may be able to contribute up to $5,500; owners age 50+ may be able to contribute up to $6,500.** 

Contributions cannot exceed compensation.

You may be able to contribute up to $5,500; owners age 50+ may be able to contribute up to $6,500.**

Contributions cannot exceed compensation. 

 

Who can make deductible contributions? No one can deduct contributions.  Deductible up to annual contribution limit:

Single individuals not active in employer retirement plans

Single individuals not in qualified retirement plans with MAGI below defined limits

Married couples with neither spouse active in an employer retirement plan

Married individuals active in qualified retirement plans filing joint tax returns with MAGI below defined limits

Married individuals not active in qualified retirement plans filing joint tax returns with spouses who are, as long as MAGI is below defined limits

What are the tax advantages?

Earnings are tax-deferred and withdrawals are tax-free if the account is open for 5 years and withdrawals are for a qualified reason 

Earnings grow tax-deferred until withdrawn

Contributions may be tax deductible
When can I withdraw without restrictions?  Regular contributions can be withdrawn
tax-free and penalty-free at any time

After the account has been opened 5 years, earnings can be withdrawn tax-free and penalty-free for any of these reasons:  age 59 1/2, disability, death, or a first-time home purchase***
 

Withdraw penalty-free for any of the following reasons:

Qualified high-education expenses
First-time home purchase***
Age 59 1/2
Disability
Qualifying medical expenses exceeding 7.5% of adjusted gross income
Payment to beneficiaries upon owner's death
Payment of health insurance premiums while unemployed for 12 weeks or longer


*Contributions and deductibility limits change frequently. Consult your tax professional regarding your individual circumstances.
**$5,500 and $6,500 are individual limits for all IRA contributions annually.
***Lifetime limit for exemption on first-time home purchase is $10,000. 
 

IRA Types

A Traditional IRA lets you save for your retirement goals while you receive immediate tax benefits. You can contribute to a Traditional IRA if you’re under age 70 ½ with earned income (or filing jointly with a spouse who has earned income).

View the comparison chart for contribution details, tax advantages, and withdrawal restrictions.

Complete applicable forms to open/change your Traditional IRA:  

Return completed forms:

  • Send forms via secure email or
  • Fax forms: 703-925-5125 or
  • Mail: NWFCU, Attn: IRA Specialist, PO Box 1229, Herndon, VA 20172

The Roth IRA offers a unique savings opportunity. Unlike Traditional IRAs, Roth contributions are not tax-deductible because they’re made with after-tax dollars. Meaning, your withdrawal at retirement age can be made tax-free.

View the comparison chart for contribution details, tax advantages, and withdrawal restrictions.

Complete applicable forms to open/change your Roth IRA: 

Return completed forms:

  • Send forms via secure email or
  • Fax forms: 703-925-5125 or
  • Mail: NWFCU, Attn: IRA Specialist, PO Box 1229, Herndon, VA 20172

A Coverdell Education Savings Account allows you to contribute up to $2,000 per year, per child. Earnings grow tax-free if distributions are used for qualified education expenses.

What happens if my child doesn’t go to college?

There are two options available to Coverdell beneficiaries when they reach age 30:

  1. They can close the account, keep the balance and pay tax on the earnings plus a 10% penalty
  2. Funds can be transferred to another family member under 30 years old, thereby establishing a new Coverdell plan

Note: Income criteria applies; check the IRS website for details.

Complete the applicable forms to open/change your Coverdell ESA:

Return completed forms:

  • Send forms via secure email or
  • Fax forms: 703-925-5125

Simplified Employee Pension (SEP) IRAs are designed for self-employed individuals and small business owners. SEP IRAs are:

  • Easy - quick to set-up and maintain
  • Convenient - no mandatory contributions or annual tax filings
  • Beneficial - tax-deductible contributions can help decrease taxes and tax-deferred compounding helps both employers and employees build retirement assets

Note:  All contributions made under a SEP IRA are employer contributions; employees cannot defer a portion of their salary to a SEP.

To learn more, contact our IRA Specialist.