Individual Retirement Accounts

Individual Retirement Accounts (IRAs) have always been excellent retirement investments. Now there are new ways to take advantage of the tax-free and tax-deferred savings. Perhaps the biggest news for retirement investors is the creation of the Roth IRA, which allows you to grow your retirement savings and withdraw them at retirement tax free.

Fast facts about the Roth IRA:

  • Expanded Availability – The Roth IRA is open to those with Adjusted Gross Income (AGIs) as high as $150, 000 for married couples, $95,000 for singles, nearly 4 times higher than for traditional IRAs.
  • Conversions – You can convert your traditional IRA to a Roth IRA in order to make tax-free withdrawals after retirement. However,  you will pay taxes on the amount converted in the year in which you convert.
  • Tax-free Distributions – While contributions are not tax deductible, contributions and interest can be withdrawn tax-free. You pay 0% capital gains.
  • Flexible Withdrawal Rules – Withdrawals are not required to begin at age 70 1/2 (as with traditional IRAs), and penalty-free withdrawals are permitted for health/disability, first time home purchase (up to $10,000) and higher education expenses (provided the account has been in existence for 5 years).
  • No age restrictions – Contributions to a Roth IRA can continue past age 70 1/2, unlike traditional IRAs.
  • Rollovers – Limited to one distribution per IRA rollover per 12 month period and must take place within 60 days of distribution. This is a reportable transaction.
  • Transfers – Generally from one trustee, custodian or issuer to another, but may be between like Roth IRA at the same financial institution. Transfers are non-reportable transactions.

VCCFCU offers the following Individual Retirement Accounts:

  • Roth IRA – $5,500 annually plus an additional $1000 catch-up contribution if you are 50 years or older for the year in which you are making the contribution.
  • Traditional IRAs – $5,500 annually plus an additional $1000 catch-up contribution if you are 50 years or older for the year in which you are making the contribution.
  • Education IRAs – Allows you to save up to $2000 per year per child for education expenses paying 0% capital gains tax upon withdrawal. Education IRAs can be used to pay qualified elementary school and secondary school expenses as well as those for higher education.

To open your IRA, please call the Member Services Department to request IRA documents. 1-718-549-5858.