An IRA, or Individual Retirement Account, allows you to save a portion of your earnings during your working years for use during your retirement. An IRA is similar to regular savings; however, dividends earned are exempt from federal and state income taxes until withdrawn. Participation in this program is subject to rules and guidelines as enacted by Federal Legislation. SRP Federal Credit Union offers a variety of IRAs, including Traditional, Roth, and Coverdell Education Custodial Accounts (ESA). We offer competitive dividend rates with no maintenance or set-up fees.
Our traditional IRA shares and share certificates offer members a tried and true way of saving for retirement. These accounts may allow you to deduct all or part of your annual contributions at tax time, depending on your circumstances (see tax advisor). These IRA gains are not usually taxed until you begin to take a distribution at age 73.
We offer Roth IRA shares and share certificates. This type of Individual Retirement Account (IRA) allows members to set aside funds for retirement or future spending needs. The Roth allows members to withdraw money without penalty or taxes.
If you put $1,000.00 a year into a Roth IRA and after four years had $4,700.00, you could take out your original contribution ($4,000.00) without any penalty. The $700.00 you earned must stay in at least five years and until you are 59.5 before you can withdraw without penalty.
Why open a Coverdell ESA? Unlike Traditional and Roth IRAs, ESAs are not tools for retirement savings. They are designed solely to help pay qualified education expenses. Nondeductible contributions up to $2,000.00 may be made to each child's account annually. Withdrawals used to pay for qualified education expenses are generally tax-free and not subject to a 10% IRS penalty for early withdrawal.
*As always, it is best to consult your tax advisor to determine which IRA or ESA option is best for you.