Savings - IRAs

An Individual Retirement Account (IRA) is a personal retirement savings plan available to anyone who receives taxable income during the year. IRAs bring together two tremendously powerful forces, both of which benefit you - compound interest and tax savings.

Based on your age, income and savings goals, you first need to select an IRA type. Heritage Credit Union offers three types of IRAs: Traditional, Roth, and Coverdell Education Savings Account.

Look at the chart below to further understand the IRA types that we offer, or contact one of our Member Service Representatives. We're here to answer any questions you may have about Individual Retirement Accounts, but we are not licensed tax advisors. You may wish to consult with a tax advisor to see if an IRA works best for your finances.

IRA Type Comparison Chart
	Traditional IRA	Roth IRA	Coverdell Education Savings Account (ESA)
Who can contribute?	Anyone under the age of 70 1/2 who has income from compensation (or who is filing jointly with a spouse who earns compensation)	Anyone who has income from compensation (or who is filing jointly with a spouse who earns compensation) with the following MAGI:*- Up to $95,000 (single filers)- Up to $150,000 (joint filers) Reduced contributions allowed for higher incomes (up to $110,000 for single filers and $160,000 for joint filers)	Anyone who has MAGI*- Single filer: up to $95,000 - Joint income for filers: up to $190,000 Some people with higher MAGI* may be able to make smaller contributions Contributions not allowed after the beneficiary reaches 18 (except for special needs beneficiaries)
How much can I contribute?	$5,000 $6,000 if age 50 or older Cannot exceed compensation Reduces contributions that can be made to Roth IRAs	$5,000 $6,000 if age 50 or older Cannot exceed compensation Reduces contributions that can be made to traditional IRAs	$2,000 per child Limit applies to all Coverdell Education Saving Accounts (ESA) for the same child
Who can make deductible contributions?	Fully-deductible contributions:- Single individual not active in employer retirement plans (regardless of income)- Single individuals active in employer retirement plans with MAGI* of less than $34,000- Married couples with neither spouse active in an employer retirement plan (regardless of income)- Married individuals active in employer retirement plans with joint tax returns showing MAGI* of less than $54,000- Married individuals not active in employer retirement plans with spouses who are, as long as MAGI* is $150,000 or less Individuals with incomes exceeding the above limits may be able to deduct an amount that is less than the maximum amount that can be contributed	No one can deduct contributions	No one can deduct contributions
What are the tax advantages?	Earnings grow tax-deferred until withdrawn Contributions may be tax-deductible	Regular contributions can be withdrawn tax and penalty-free at any time After the account has been opened five tax years, earnings can be withdrawn tax and penalty-free for any the these reasons: age 59 1/2, disability, death, or first-time home purchase**	Withdrawals for certain qualified education expenses are tax-free Special needs beneficiaries can withdraw funds tax-free to pay for qualified education expenses at any age Qualified education expenses may include tuition, fees, books, computer equipment and technology required for elementary, secondary, and post-secondary education A beneficiary may receive tax-free distributions from a Coverdell ESA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits
When can I withdraw without restrictions?	Withdraw penalty-free for any of the following reasons: -Qualified higher-education expenses -First-time home purchase** -Age 59 1/2- Disability- Qualifying medical expenses exceeding 7.5% of adjustable gross income -Payment to beneficiaries upon the owner's death -Payment of health insurance premiums while employed for 12 weeks or longer	Earnings are tax-free if account is opened for five tax years and withdrawn for a qualified reason (age 59 1/2, disability, death or a first-time home purchase**) Not required to start withdrawals at age 70 1/2	Withdrawals are tax and penalty-free only for qualified education expenses (earnings are subject to tax and penalty for most other withdrawals) Funds can be transferred from one child's account to an account for another child in the family*

After deciding which IRA is best for you, you can then select an investment option. We offer three investment options for your IRA account: Money Market, Share Certificate, and Share. Our Member Service Representatives can help you select which investment option is best based on your return expectations and timeframe for investing.

IRA Investment Options
	IRA Money Market	IRA Share Certificate	IRA Share
Rate Information	This investment offers the same tiered rate structure as our regular Money Market. $2,000 - $9,999 $10,000 - $24,999 $25,000 - $49,999 $50,000 - $99,999 $100,000 & greater	Choose any of our current Share Certificate rates and terms, including our Specials.	This is a variable-rate account.
Benefit	As your balance increases, so does your rate of return.	Earn a guaranteed return on your investment - simply choose your length of investment (term).	No minimum balance requirement, funds can be withdrawn at any time.

*MAGI - Modified Adjustable Gross Income from the federal tax form
** Lifetime limit for exemption on first-time home purchase is $10,000
*** Formally known as the Education IRA