IRAs

IRA is an Individual Retirement Account that can be contributed to annually. At Aspire Credit Union we offer both the traditional and Roth options to our members. We also offer Coverdell ESA’s which you can read about on that page. 

 

  • The annual contribution limit for 2021 is $6,000, or $7,000 if you’re age 50 or older.
  • The federal rules limit the annual amount an individual can contribute to an IRA as regular contributions.
  • The total contribution limits to all of your tradition and Roth IRAs cannot be more than your taxable compensation for the year, if your compensation was less than this dollar limit. However, your Roth IRA contribution might be limited based on your filing status and income.
  • It is each IRA owner’s responsibility to determine if they are eligible to make regular Traditional or Roth IRA contributions.

Traditional IRA

  • Contributions are pre-tax with potential tax benefits for contributions like a credit or possible deductions making the funds tax deferred.
  • Withdrawals are taxable and subject to early withdrawal penalty before age 59 ½.
  • Traditional IRA owners must begin taking required minimum distributions (RMDs) after reaching age 72.

Roth IRA

  • New contributions go into Roth IRAs on an after-tax basis. The Roth IRA owner does not take income tax deductions for these contributions. Contributions, therefore, generally are not taxed when distributed.
  • Grows tax free
  • Pretax assets (i.e., earnings) that are withdrawn as part of a nonqualified distribution are considered taxable income.
  • Qualified distributions must meet two conditions: the five-year period AND a qualified reason. A qualified reason can be: age 59 ½ or older, disability, death, or first-time homebuyer.
  • Financial organizations do not track the taxable and nontaxable assets in Roth IRAs. This is the IRA owner’s responsibility.

Wondering which to select?

One way to help determine what IRA might be best for you is to think of it like this:

If you anticipate being in a lower tax bracket in your retirement years, the Traditional IRA may be for you as the contributions are made while in a higher tax bracket during working years and withdrawals are taxed while in a lower tax bracket.

If you anticipate being in a higher tax bracket in your retirement years, the Roth IRA may be for you as the contributions are made while in a lower tax bracket during working years and grow tax free, so a qualified distribution, contribution and the earnings, may be distributed tax free.

Interest Rate

See Our current interest rates.

For more information regarding IRAs, please visit: Retirement Plans FAQs Regarding IRAs | Internal Revenue Service (irs.gov)

Tax Advice

If you have tax questions in regard to IRA’s, consider talking with a competent tax advisor.