Saving with IRAs
Increase Your Retirement Savings
Individual Retirement Accounts Can Help You Prepare for Everything that Lies Ahead
Our IRA options can help you save the money you need to live comfortably when you retire. With the benefit of tax-deferments, IRAs are an excellent opportunity for your investment to grow faster than in a taxable account.
In addition, IRAs are a great way to supplement a 401(k). Utilizing both options can help you reach your
saving goals faster and make your retirement even more financially comfortable.
For added
peace-of-mind, UFirst IRAs are Federally Insured by the NCUA up to $250,000 so you can be confident in the
security of your savings.
Open an IRA
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What is an IRA?
An IRA, or Individual Retirement Account, is an account that offers tax advantages and a secure way to save for retirement. UFirst IRAs avoid market risk and provide a safe return on the hard-earned money in your IRA. These features make our IRAs an ideal way to prepare and save for your future. UFirst IRAs earn dividends on the entire balance of the IRA and have no monthly fee.
Traditional IRA and Roth IRA
At UFirst, we offer both Traditional IRAs and Roth IRAs. Although both accounts are designed to help you save towards retirement, it’s important to understand the different eligibilities, limitations, and tax advantages of both IRA types to choose the right account for your retirement needs.
Compare Traditional IRAs and Roth IRAs
| Traditional | Roth | |
|---|---|---|
| Choosing an IRA |
You want to reduce your taxable income now and pay taxes later. |
You don't need to reduce your taxable income now and want to have tax-free withdrawals later. |
|
Tax Benefits* |
Generally made with pre-tax money. Contributions may be tax-deductible if you meet certain income eligibility.
Taxes deferred until funds are withdrawn after the age of 59.5. |
Made with after-tax money. Earnings grow tax-free. Earnings can be withdrawn tax-free but subject to eligibility. Contributions are eligible to be withdrawn without penalty. |
|
Withdrawals |
Taxes are paid on earnings and contributions when you make withdrawals. |
Tax-free and penalty-free provided it’s been 5 years since your first contribution, and you are aged 59.5 or older |
| Contributions |
Contribution limit for 2023: Those under the age of 50: $6,500 Aged 50 and up: $7,500
Contribution limit for 2024: Those under the age of 50: $7,000 Aged 50 and up: $8,000 |
Contribution limit for 2023: Those under the age of 50: $6,500 Aged 50 and up: $7,500
Contribution limit for 2024: Those under the age of 50: $7,000 Aged 50 and up: $8,000 |
| Eligibility |
Must have earned income. Spousal income qualifies if taxes are filed jointly and as married. |
Must have earned income. Spousal income qualifies if taxes are filed jointly and as married. Must meet Modified Adjusted Gross Income (MAGI) limits. |
|
Early Withdrawal Penalties |
Penalties on withdrawals taken before age 59.5. See penalty exceptions below. |
No penalties for early withdrawals if you are 59.5 and it’s been 5 years since your first contribution. |
|
Required Minimum Distribution |
Minimum distribution required at the age of 73. |
No distribution requirements. |
| Penalty Exceptions |
Age 59.5 First-time home purchase up to $10,000 Qualified education expense Death or permanently disabled Health insurance for unemployed See more exceptions here. |
Age 59.5 First-time home purchase up to $10,000 Qualified education expense Death or permanently disabled Health insurance for unemployed See more exceptions here. |
SEP IRA
Simplified Employee Pension Plan
If you have an SEP IRA as an employment benefit or if you are a business owner who contributes to an employee IRA, you can learn more about SEP IRA here.
If you are self-employed or a business owner, you can take advantage of a Simplified Employee Pension Plan. SEP IRAs do not have tax filing requirements, no account fees and no minimum to open. As a business owner, you can also contribute to your employee’s retirement through SEP IRAs.
Contributions
Contributions to SEP IRAs are completely discretional and can vary year to year depending on your financial situation. Years that your business is financially successful, you can fund more and, in years when finances are tight, you can opt to fund less. This gives you the control you need to save throughout your career.
Contributions cannot exceed the lesser of:
- 25% of the employee’s compensation, or
- $66,000 (for 2023)
Moving your IRA
IRA transfers and rollovers are the best ways to consolidate existing accounts. If you have multiple IRA or retirement accounts, consolidating helps simplify your retirement savings.
Rolling over a 401(k) from a previous employer into an IRA ensures you have control over your investment. You can continue to build your retirement savings and still get tax benefits.
IRA Transfers
An IRA transfer enables you to transfer funds from one IRA to a different IRA of the same type. For example, funds could be moved from a Traditional IRA to another Traditional IRA. A direct transfer is the simplest way to move assets from one account into another. Transfers are not taxable or reportable to the IRS and are often fully managed by the distributing and/or receiving financial institutions.
IRA Rollovers
An IRA rollover refers to the movement of funds between any type of retirement account. Typically, one rollover is permitted during a 12-month period without tax implications. It is still reportable to the IRS and must be accounted for at tax time.
A direct rollover refers to the movement of funds from a retirement plan, like a 401(k), to a different retirement account. With a direct rollover, your plan administrator will make a check payable directly to the other retirement plan and no taxes will be withheld from your direct rollover.
Though an indirect rollover is a tax-free distribution of all or part of your IRA assets, it is reportable and, therefore, potentially taxable if funds are not quickly deposited. If all or part of the funds are deposited back into an IRA or retirement account within 60 days, the money will not be taxed. Indirect rollovers are subject to a mandatory 20% withholding. If the amount withheld is not replaced to the amount rolled over, this could lead to a taxable event plus penalties depending on age.
Start Saving for a Better Retirement
Whether it’s opening an IRA or rolling over a 401(k), our financial advisors can help you find the right savings solution to ensure your retirement goals are on track. Let us help you plan for your future. Visit a local branch or call us at 801-481-8800 to get started.
See IRS guidelines for IRA rules about contributions, withdrawals and how to avoid
withdrawal penalties.
No minimum requirement for IRA Accumulator option.
UFirst Credit Union
does not provide tax or legal advice.