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IRAs

IRAs

Invest with Texas Trust

IRAs (Individual Retirement Accounts) with Texas Trust Credit Union offer you a choice of opening your IRA through either a savings account or a CD. Choose from the options we provide.

Traditional IRAs Roth IRAs Coverdell Education Savings Account IRA Rollovers

Setting aside money into an IRA can be a great way to supplement your other retirement savings. A Traditional IRA at Texas Trust Credit Union offers tax-deferred savings opportunities. You pay no taxes on the earnings, and in some case on the contributions, until distributions are taken from the account.

Consider a Traditional IRA if:

  • You want to take a tax deduction on the IRA contribution thus lowering your current tax bill.
  • You anticipate your tax rate will be lower at the time of distribution (after you retire) than your current tax rate.
  • Your income is above the Roth IRA income limits of $118,000 (single) or $186,000 (joint). If your income is below these levels, you may want to consider a Roth IRA.

One big reason to choose a Traditional IRA over a Roth IRA is the opportunity for some investors to take a tax deduction on the IRA contribution, which may lower your current tax bill. (Investors under the age of 70½ with earned income can still contribute to a Traditional IRA even if they don't qualify for the tax deduction.)

You may qualify for a full or partial deduction of your Traditional IRA contribution if:

  • You and, if you are married, your spouse is not covered by an employer sponsored plan.
  • You as an individual are covered by an employer sponsored plan and:
    • Your MAGI for a single file or head of household is $62,000 - $72,000
    • Your MAGI for a joint filed is $99,000 - $119,000
    • Your MAGI for married filing separately is $0 - $10,000
  • You are not covered by an employer-sponsored plan and your spouse is covered by an employer sponsored plan and your MAGI is $186,000 - $196,000.

Annual Contribution Limits1

Year Age Under 50 Age 50 and Over
2013 and after $5500 $65002

How to Open your Traditional IRA:

Visit any of our branches. Or, call us at (972) 263-5171 for more information.

Other considerations with the Traditional IRA:

  • Any earnings and deductible contributions are subject to tax upon distribution.
  • Taxable distributions before age 59½ may be subject to a 10% penalty tax. Exceptions to the penalty include distributions due to death, disability, substantially equal periodic payments, eligible medical expenses, certain unemployed individuals' health premiums, limited "first-time" home purchase, qualified higher education expenses or IRS levy. See your tax advisor for details before making any contributions.
  • To discuss your options, contact your tax advisor. Required minimum distributions (RMDs) must start at age 70½.3

A Roth IRA may be one of the best ways for individuals to save for retirement, for one simple reason: the earnings on your investment are free from federal income taxes as long as certain conditions are met.

Roth IRA Benefits:

  • Contributions can be withdrawn anytime without taxes or penalties.
  • Distributions, interest, and dividends are tax free if you are at least 59½ and the account has been established for longer than five years.3 Other reasons may also apply for tax-free distributions.
  • You can contribute after age 70½ as long as you have earned income.
  • No required minimum distribution (RMD) during your lifetime.
  • Tax-free distributions can be passed to your beneficiaries.

Consider a Roth if:

  • You want tax-free earnings.4
  • You are already saving for retirement with an employer-sponsored plan.
  • Your income does not exceed $186,000 for married taxpayers or $118,000 for single taxpayers.5
  • You want to invest for retirement but may need to access your savings.

Contribution Limits1

Year Age Under 50 Age Over 50
2013 and after $5500 $65002

To discuss your options, contact Jim Blazek with Texas Trust Investment Services.

How to Open your Roth IRA:

Visit any of our branches. Or, call us at (972) 263-5171 for more information.

With the cost of college tuition rising steadily, a Coverdell Education Savings Account may be a great, tax-advantaged way to save for a child's future. A Coverdell ESA allows tax- and penalty-free earnings when the money is used to pay for qualified primary, secondary, and higher education expenses.6 And you don't have to be the child's parent to contribute to the account—grandparents, aunts, uncles, and friends may contribute as well.

Coverdell ESA Benefits:

  • Contribute up to $2,000 per year for each child under 18
  • Full contributions to the account are allowed apart from contributions to a Traditional IRA, Roth IRA, or employer-sponsored retirement savings plan
  • Choose from a variety of investment products, including stocks, bonds, and mutual funds through Texas Trust, and products such as NCUA-insured CDs7 and Money Market accounts.

Your life changes.

How you invested for retirement 2, 5, or even 10 years ago may need to be adjusted. That's where a Traditional Rollover IRA can help.

Generally, Traditional Rollover IRAs occur when you change jobs or retire and want to take a distribution from your former employer's retirement plan, without incurring taxes and potential IRS early withdrawal penalties. There are different ways you can take this distribution.

Direct Rollover

With a direct rollover, the fund's assets are made payable to the qualified plan or IRA custodian/trustee – never to the individual. This option allows you to keep 100% of your retirement savings by avoiding IRS early-withdrawal penalties and current taxes.

Indirect Rollover

With an indirect rollover, the distribution check is made out directly to you. You then have 60 days to deposit the money into a Traditional Rollover IRA to avoid taxes and IRS penalties. Your distribution check is 80% of your savings because your former employer is required to withhold 20% for federal taxes and state taxes where applicable. When you open a Traditional Rollover IRA, you’ll need to add the 20% back if you want to keep 100% of your eligible rollover assets. However, depending on your tax situation, you may be entitled to claim a refund of 20% when you file your taxes. To be fully informed, please consult a tax advisor before opting for an indirect rollover.

Cash Distribution

In a cash distribution, the distribution check is made out directly to you and you choose not to rollover your distribution. This is generally the least advantageous option because you lose 20% of your money to federal taxes (plus any applicable state taxes). Additionally, if you’re under 59-1/2, you’ll be subject to a 10% IRS early-withdrawal penalty and the entire amount is reported as taxable income. To be fully informed, please consult a tax advisor before opting for a cash distribution.

Three ways you can close out your current qualified retirement plan:

IRA Rollovers

1 Source: Internal Revenue Service

2If you are 50 or older, you can take advantage of a "catch-up" provision and set aside additional funds each year.

3 You may delay your first distribution until April 1 of the year following the year you turn 70½. Thereafter, you must take all distributions no later than December 31 of each year. If you don't distribute the required amount for any given year, you may face a 50% penalty tax on the amount of your Required Minimum Distribution that was not taken. Does not apply to Roth IRA.

4Qualified distributions before age 59 1/2 are also federally tax free if the account has been established for at least five years and are taken because of death, disability, or for a first-time home purchase (up to a lifetime cap of $10,000).

5 Your Modified Adjusted Gross Income (MAGI) is too high to contribute to a Roth IRA if it exceeds $186,000 in 2017 for married taxpayers filing jointly, or $118,000 in 2017 for single taxpayers. Partial contributions are allowed for Roth IRAs if your MAGI is between $118,000 and $132,999 in 2017 if single, and between $186,000 and $195,999 in 2017 if married, filing jointly. If married and filing separately, a partial contribution is allowed if MAGI is between $0 and $9,999.

6 Qualified Coverdell Education Savings Account distributions are not subject to state and local taxation in most states. Earnings accumulate tax- and penalty-free as long as the assets are used to pay qualified education expenses and are withdrawn before the child turns 30.

7 CDs are NCUA insured up to at least $250,000 per institution and offer a fixed rate of return, while the return and principal value of other investments will fluctuate with changing market conditions. A minimum deposit may apply. Generally, CDs may not be withdrawn prior to maturity.

See our Truth in Savings disclosures: Share Accounts (Savings and Checking). You may also be interested in Savings/CDs options.

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