USSFCU offers both Traditional IRAs and Roth IRAs to help its members save for retirement. Either may be opened as a savings account or a term certificate. Despite some different characteristics detailed in the comparison below, both Traditional and Roth IRAs at USSFCU share the following common elements:
- Competitive dividend rates above standard savings rates
- No set up fees or monthly/annual maintenance fees
- A very low $5 minimum balance
- The ability to purchase Share Certificate(s) with IRA funds
- A $5,500 per year contribution limit1 2018 contribution limit
- A $6,000 per year contribution limit1 2019 contribution limit
- Additional $1,000 “catch-up” contributions allowed for members ages 50 and above
You may make 2018 IRA contributions until April 15, 2019.2
Which approach is best for you? Traditional, Roth, or both? Give us a call and we’ll help you chart the best course for you and your family!
1 Annual contribution amount may change. 2 Filing deadline and due date for 2018 Federal Income Tax Returns.
Traditional vs. Roth
The main difference between Traditional and Roth IRAs, both of which are tax-advantaged retirement savings tools, is how these accounts are treated by the tax code.
A Traditional IRA from USSFCU may accept contributions of pre-tax or after-tax dollars and the dividends grow tax-deferred. When you make withdrawals after age 59½, they are treated as current income. In addition, contributions are potentially tax deductible depending on your filing status and income.
A Roth IRA from USSFCU is funded only with after-tax income. Therefore, contributory funds may be withdrawn at any time without tax penalties. When members make qualified withdrawals from their Roth IRAs after age 59½, earnings are not taxed.
Aside from these fundamental differences, Roth IRAs and Traditional IRAs also differ in a few other ways, which are described below.
- Anyone under age 70½ with earned income may open a Traditional IRA
- Contributions are deductible from state and federal tax*
- Earnings are tax deferred until withdrawal
- Withdrawals may begin at age 59½ and are mandatory at age 70½ when members are often in a lower tax bracket
- Early withdrawals are subject to penalty**
- No age limits for eligibility
- Eligibility is subject to income limits based on filing status
- Contributions are NOT tax deductible
- No penalty for early withdrawal of contributory funds
- Early withdrawals on earnings subject to penalty**
- Earnings are 100% tax free on qualified distributions
- No mandatory distribution age
*Subject to some minimal conditions. Consult a tax advisor.
**Certain exceptions apply, such as qualifying higher education expenses, first time home purchases, etc.
Deciding which retirement savings options are best for you and your family? Give us a call or visit one of our convenient branches. Also, below are a few background pieces that address common questions related to IRAs for those who might be interested in learning more.
IRA Eligibility (PDF)
Roth IRAs (PDF)
Traditional IRAs (PDF)
Roth IRA vs. Traditional IRA (PDF)
Simplified Employee Pension Plans (SEP)