Traditional IRA Accounts
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Traditional IRA Accounts – Your Future Starts Now!
Whatever your age, finances or saving experience, now is the time for you to get started. Prepare for a comfortable retirement, or reach other major financial goals, with the help of an Individual Retirement Account from your credit union.
Forms
Traditional IRA Application & Disclosures

IRA Brochure
IRA Rollovers & Transfers
IRA Beneficiary Change
IRA Direct Rollover
IRA Transfer
IRA Contribution Deposit
IRA Withdrawal
Traditional & Roth IRA
2016 & 2017
Contribution Limits


Traditional
 
$5,500, If Age 50 or older $6,500

Roth  
$5,500, If Age 50 or older $6,500

Modified AGI limits apply, consult IRS Publication 590.

Click here for more information
on ROTH IRA Accounts.

 

Traditional IRA Information

Can I establish a Traditional IRA?
Generally, if you have taxable compensation from a job or alimony, you can establish a Traditional IRA before the tax year when you reach age 70½. Contributions are fully tax-deductible if you or your spouse do not participate in an employer-sponsored retirement plan. Beginning in the calendar year in which you reach age 70½, you can no longer make contributions to a Traditional IRA.


If I am covered by a retirement plan, am I eligible to open an IRA? 

You may have a Traditional IRA even if you are covered by a qualified pension, profit-sharing or other retirement plan, but you may be limited in the amount of the contributions that are tax-deductible. (To be “covered” means that money is contributed to your account, whether or not you contribute yourself.) For limitations on deductibility, see IRS Publication 590.


How much can I contribute to IRAs this year (2016)? 

Most people can currently contribute up to $5,500 or 100% of your taxable compensation for the year, whichever is less. The $5,500 limit applies to total contributions to all IRAs in the person’s name (Traditional and Roth).

Can I contribute more if I am 50 years of age or older?
If you reach age 50 before or during the year, you are permitted to play “catch-up” with your retirement savings by contributing up to $6,500 (an extra $1,000) The “catch-up” provisions apply to anyone who meets the age requirement and is otherwise eligible to contribute to an IRA.

What if I don’t have $5,500?
The law doesn’t require a minimum contribution. You can start an IRA at METRO Federal Credit Union with as little as $100. If your taxable compensation is under $5,500, you can contribute all or part of it to an IRA.

When can I contribute?
You can open an IRA, or contribute to an existing IRA, at any time. In order to apply to a given tax year, contributions may be made from January 1 of that year up to the tax filing day of the following year. The tax filing day is the normal tax deadline, even if you have received an extension beyond that date for filing your tax return. For tax year 2016, you can make contributions until April 15, 2017.

Is my IRA contribution tax-deductible?

Provided that you have taxable compensation, contributions within the allowable limit are fully tax-deductible if the person or spouse is not covered by a retirement plan at work. If you participate in an employer’s qualified retirement plan on any day during the tax year, the deductibility of your contributions declines to zero between certain modified adjusted gross income (AGI) ranges (see table below). The exact amount of partial deductions can be calculated by using a worksheet in IRS Publication 590, “Individual Retirement Arrangements (IRAs).”
If you are married, filing jointly, and your spouse is covered by a plan at work (but you are not), the deductibility for your contribution phases out when your modified AGI is more than $184,000 and reaches zero at $194,000 or more. If you (and your spouse, if you are married) do not participate in a corporate, government, Keogh, or other retirement plan, then your Traditional IRA contribution is generally fully tax-deductible, whatever your income level.

What if both my spouse and I have earned income?  
If both of you have earned income, you can establish separate Traditional IRAs and can each contribute up to $5,500 for the 2016 tax year (or $6,500 if you reach age 50 before or during the year). If your combined income is less than your combined limits, the combined IRA contributions are limited to 100% of your taxable compensation.

What if my spouse doesn’t work?
If one spouse has little or no earned income, a Traditional IRA can be established based on the income of the higher-earning spouse. In this case, the combined total contributed may be up to $11,000 for the 2016 tax year (or $13,000 if each of you reaches age 50 before or during the year). The total may be divided between the two accounts in any way desired, so long as neither account receives more than $5,500 (or $6,500 if each of you reaches age 50 before or during the year). If your combined income is less than your combined limits, the combined IRA contributions are limited to 100% of your taxable compensation.

Can I transfer a Traditional IRA from another fund company to METRO Federal Credit Union?
You can transfer a Traditional or Roth IRA directly from one mutual fund company to another. To directly transfer an IRA from another company to METRO Federal Credit Union, please visit Resource Center and select “IRA Transfer Form.”

 

What is a rollover?  
Examples of a rollover are moving assets from a Traditional IRA or an employer-sponsored retirement plan account, such as a 401(k) or 403(b) plan, into a Traditional IRA, or from a Roth IRA into another Roth IRA. You cannot roll over money from a 401(k) or 403 (b) plan into a Roth IRA, but you may convert your rollover IRA into a Roth IRA if you are eligible to do so. For more information, including rollover contribution time limits, see IRS Publication 590.

We offer exceptional flexibility in meeting your investment needs.  Once you have selected the type of IRA that’s best for you, choose from our two investment options.

When can I use my Traditional IRA assets?

Unlike many employer-sponsored retirement plans in which access to assets might be limited until the participant has a change of employment or reaches retirement age, access to IRA assets is guaranteed, always. Most Traditional IRA distributions taken before the IRA owner reaches age 59½ are subject to a 10 percent early distribution penalty tax. This is to discourage people from taking Traditional IRA distributions at an early age rather than keeping the assets for retirement. The 10 percent early distribution penalty tax does not apply in the following situations.
•Age 59½
•Death
•Disability
•Certain medical expenses
•Health insurance premiums following unemployment
•First home buyer expenses
•Higher education expenses
IRS Publication 590, Individual Retirement Arrangements (IRAs), provides more detail on these penalty tax exceptions.

Am I ever required to take distributions from my Traditional IRA?
Traditional IRA distributions become mandatory beginning in the year that a Traditional IRA owner turns age 70½. These mandatory distributions are called required minimum distributions (RMDs). IRA owners must begin taking RMDs by April 1 of the year following the year they turn 70½. These distributions are based on the IRA balance divided by the applicable distribution period. Because IRAs were created to provide income during retirement—not to be a tax shelter— IRA owners failing to take their RMDs are subject to a 50 percent excess accumulation penalty tax on the assets that should have been distributed but were not.

IRA Savings
arrow Offer competitive variable rate
arrow Dividends compounded and paid monthly
arrow No minimum investment amount
arrow Additional deposits permitted at any time, up to your maximum yearly contribution
arrow Payroll deduction deposits
arrow Available as Traditional and Roth IRA
arrow Savings federally insured up to $250,000.

 

IRA Certificates
arrow Offer competitive fixed rates
arrow Dividends compounded and paid monthly
arrow $1,000 minimum balance requirement for Traditional and Roth IRAs
arrow Savings federally insured up to $250,000.

 

All information and examples provided here are for general illustrative purposes only, and are addressed in general to a hypothetical reader, not to you specifically. Tax law is complex, and has many general rules, details, and exceptions, and state and local tax law varies from federal tax law. To learn about federal tax law and rules, details and exceptions concerning IRAs, you should read  IRS Publication 590  “Individual Retirement Arrangements (IRAs)” available at   www.irs.gov or by calling the IRS at 1-800-TAX-FORM (1-800-582-6757). If you have questions and for tax advice, you should consult a financial or tax advisor before acting.