Individual Retirement Accounts (IRA)

Individual Retirement Accounts (IRA)

Start investing in your future today and reap the rewards tomorrow. Choose the IRA to match your needs.

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a smiling young man looks at his growing IRA account balance.

 

Set Yourself Up Right With an Individual Retirement Account

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Generous APY* to Grow Your Funds

Watch your savings increase year on year with compounding dividends.

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Get Started With Just $100

Start investing as soon as you've set aside the minimum deposit.

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Make Contributions to Suit Your Budget

Deposit what you can when you can, or aim to reach the yearly limit.

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Take Advantage of Tax Benefits

Each type of IRA has tricks and tips you can learn to help you save more.

 

Traditional IRA

  • Your contributions may be tax deductible.
  • Future withdrawals are taxed as ordinary income.
  • This account is a good idea if your income is likely to be lower during your retirement years than it is now, because that means your taxes will be lower in future, too.
  • You can contribute a maximum of $6,000/year (as of 2021) plus a catch-up of $1000/year if you're over 50.
  • There are early withdrawal penalties before the age of 59½.
  • At age 72, you’ll need to start taking required minimum distributions (RMDs)—a certain amount of money the IRS says you must withdraw each year.
Open An Account
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Roth IRA

  • You pay taxes upfront on your contributions, so your earnings will grow tax free.
  • Contributions may be withdrawn both tax free and penalty free at any time for any reason.
  • Your earnings may be withdrawn tax and penalty free if qualified.
  • You can contribute a maximum of $6,000/year (as of 2021) plus a catch-up of $1000/year if you're over 50.
  • There are income limits on this kind of account, so check if you qualify.
  • Required minimum distributions (RMDs) are not required.
Open An Account
a man writes Roth IRA on a little piggy bank.

 

Coverdell Educational IRA

  • This account offers tax savings for educational purposes.
  • Contributions are typically not tax-deductible.
  • Withdrawals for qualified educational purposes can be made tax-free.
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a jar with money in it being saved for college.

 

Wealth Management IRA

  • This investment account rewards higher balances with higher dividend rates.
  • Paired with an active checking account, it provides ready access to funds by avoiding penalties (subject to IRA withdrawal restrictions).
Open An Account
savings in a jar that's growing a little green plant shoot out of it.

 

Earn More With Our Competitive Individual Retirement Account Rates

INDIVIDUAL RETIREMENT ACCOUNTS   12 MOS. 18 MOS. 24 MOS. 36 MOS.
Traditional IRA Rate 2.08% 2.08% 2.23% 2.23%
APY* 2.10% 2.10% 2.25% 2.25%
ROTH IRA Rate 2.08% 2.08% 2.23% 2.23%
APY* 2.10% 2.10% 2.25% 2.25%
Coverdell Educational IRA Rate 2.08% 2.08% 2.23% 2.23%
APY* 2.10% 2.10% 2.25% 2.25%

*APY = Annual Percentage Yield. Share Certificates use simple interest on a daily basis, which applies the daily periodic rate to the balance in the account each day. Dividends are paid monthly.

 

WEALTH MANAGEMENT IRA Rate Type Dividend Rates APY
Minimum Balance to Earn APY* $2,500+ Variable 0.30% 0.30%
Minimum Balance to Earn APY* $100,000+ Variable 0.35% 0.35%

*APY = Annual Percentage Yield. Share Certificates use simple interest on a daily basis, which applies the daily periodic rate to the balance in the account each day. Dividends are paid monthly.

 

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FAQs about Individual Retirement Accounts (IRAs)

  • How is a Traditional IRA different from a ROTH IRA?

    There are several differences between these two main types of IRA.

    First, a Traditional IRA is taxed when you withdraw the funds, ideally after the age of 59½ to avoid early withdrawal penalties. This could be a good idea if your income and tax bracket is likely to be lower in future than it is now.

    A ROTH IRA is taxed when you make the contributions, so you know that what you have in your account and future earnings will all be tax free. A ROTH IRA has fewer restrictions on when you can make withdrawals.

    A Traditional IRA has no income limits to open an account, but there are income limits to your tax-deductible contributions. A ROTH IRA has income limits in order to make contributions. With a Traditional IRA, you have to start taking required minimum distributions (RMDs) at age 72. This is a certain amount of money the IRS says you must withdraw each year. ROTH IRAs do not have RMDs.

  • How much money do I need to start an IRA?

    You need a minimum deposit of just $100 to get started on any type of CommonWealth Credit Union IRA Account -- then sit back and watch it grow!

  • What's the maximum amount I can contribute each year?

    You can contribute a maximum of $6,000/year (as of 2021).

    If you're over 50, you can also make catch-up contributions of $1000/year. This is to allow you to make up for previous years where you didn't reach your $6,000 limit.

  • What happens if I deposit more than the limit in one year?

    If you go over the contribution limit of your Traditional or Roth IRA, your excess contributions will be subject to a 6% excise tax for each year that those extra funds are in your account.

  • Can I withdraw funds from my IRA?

    Depending on the type of IRA you have, penalties for early withdrawal can be as much as 10% of your savings, plus you might owe taxes. So be sure to check with your financial advisor to find out the exact terms of your account before you make any withdrawals.

    For a Traditional IRA, you will likely be penalized if you make withdrawals before the age of 59½.

    For a ROTH IRA, you may be able to withdraw your contributions anytime without penalty. But there may be penalties if you try to withdraw your earnings before age 59½ or before you've held the account for five years.

  • What are the tax advantages of an IRA?

    There are a few ways you can use an IRA account to your advantage when it comes to taxes. The advantages are different for a Traditional IRA vs. a ROTH IRA so be sure to check with your financial advisor about which is best for you.

    For a Traditional IRA, your contributions may be tax deductible. You will then pay taxes when you make withdrawals (ideally after age 59½). This could work in your favor if your future tax bracket will be lower than it is now.

    For a Traditional IRA, your eligibility to take a tax deduction on your contributions is based on three factors:

    • Whether you or your spouse are active participants in an employer-sponsored retirement plan
    • Whether your tax return filing status is married, filing jointly; married, filing separately; or a single filer
    • Your modified adjusted gross income (MAGI)

    For a ROTH IRA, your contributions are not tax deductible. You pay taxes when you make the contributions, which means your future withdrawals will not be taxed. This could work in your favor if your income and tax bracket will be higher in future than it is now.

  • Can I open an IRA if I have a 401(k) through my employer?

    Yes, you can open an IRA with your preferred financial institution any time you like, regardless of whether you have another kind of retirement account. In fact, it's a good idea not to keep all your eggs in one basket!

    Note that if you have an employer-sponsored retirement plan, your contributions to a Traditional IRA may not be tax deductible.

  • What is an IRA transfer?

    An IRA transfer is when your funds are moved directly from one IRA to another. If you do receive a check, it will be made payable to the receiving financial organization for the benefit of your IRA. You won’t be able to cash and deposit the check into another personal account.

    This type of transaction is not reported to the IRS. And because transfers are not subject to timing requirements, you can perform as many IRA transfers as you wish.

    Transfers can only take place between eligible retirement accounts. For example, you may transfer Traditional IRA assets to another Traditional IRA (including one holding SEP contributions) or to a SIMPLE IRA.

    Roth IRA assets can only be transferred to another Roth IRA. You cannot transfer assets between Traditional and Roth IRAs.

  • What is an IRA rollover?

    To complete an IRA rollover, you must first take a withdrawal and then return the money to the same IRA or to another IRA within 60 days. The money will be deposited into a non-retirement account (such as your checking or savings account) or you’ll receive a check made payable to you.

    You may want to complete a rollover, rather than a transfer, if you need to use the money for a short amount of time before returning it to an IRA.

    Rollover rules require the assets to be returned to an IRA within 60 days, which starts the day after you receive the assets. You may complete only one IRA-to-IRA rollover within a 12-month period.

    Because a rollover involves withdrawing funds from your IRA, it is a reportable transaction to the IRS. If the assets aren’t timely returned, then you will pay taxes, and possibly a 10 percent penalty tax, on the distribution.

More Ways You Can Start Saving Today

Regular Share Account

With a minimum deposit of just $10, this is a great place to start. Stay above $100 to earn monthly dividends. Plus, open and close a Special Share Account to reach a specific savings goal.

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Wealth Management Savings Account

If you're getting serious about saving, make a deposit of at least $2,500 and get greater dividends in return. Balances over $100,000 earn higher APY. The more you save, the more you earn!

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Share Certificate Accounts

Open a Certificate account with $500. Choose a term of three months to three years and watch your money grow! A 12-Month Certificate lets you make extra $100 deposits anytime.

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