Grow your savings tax-free

FAQs

• What types of IRAs do you offer?

  We offer Traditional, Roth, and Coverdell Education Savings Accounts.

• What is the difference between a Traditional and Roth IRA?

  The difference between them is the timing of the tax breaks you receive.

• What are the tax advantages to an IRA?

  Contributions to a traditional IRA are tax deductible, and withdrawals in retirement are taxed as income.

  Contributions to a Roth IRA, on the other hand, are taxed, but earnings and withdrawals in retirement are not. Which one is best for you depends on if you expect your income tax rate in retirement to be higher or lower than it is today.

• Who can open and contribute to an IRA?

  Anyone under the age of 70 ½ who earns a taxable income can open and contribute to a traditional IRA. Roth IRAs have an additional income restriction. In 2023, single tax filers must have an income below $153,000, and married couples filing taxes jointly must have an income below $228,000 to contribute to a Roth IRA.

• What is the maximum annual contribution?

  In 2023, for individuals under 50, the limit is $6,500 annually. People over 50 can contribute an additional $1,000 annually.

• Can I set up a direct deposit from my employer to go to my IRA?

  Yes, the direct deposit will go into your savings and be automatically transferred into your IRA.

• How much does an IRA cost?

  A regular IRA or certificate IRA at United Texas CU has no costs associated with it.

  If you open an IRA with a brokerage firm or mutual fund company, look to the investment’s underlying expenses, including operating expenses and commissions. Then, look to whether the investment is managed by a financial professional. A good rule of thumb is to look for an IRA with fees below 1 percent.

• Can I contribute to someone else’s IRA?

  You can only contribute to an IRA for a spouse, and only if you file a joint tax return.

• When can I withdraw from my IRA, and how much?

  You can withdraw from your IRA for retirement, or earlier if you are a first-time home buyer or paying for higher education for yourself, your spouse, your children, or your grandchildren.

  You can begin to take penalty-free distributions from your IRA at age 59 ½, as long as you made the first contribution at least five years earlier if you have a Roth IRA. Traditional IRAs require you to begin taking a required minimum distribution (RMD). Roth IRAs do not.

  There has been a change in RMD rules effective January 1, 2023:

  • IRA owners who attained age 72 on or before December 31, 2022, will continue to be required to take their RMDs for 2022 and 2023 and beyond.
  • IRA owners who attain age 72 in 2023 are not required to take their first RMD until the year in which they attain age 73.

  If you are a first-time home buyer, you can withdraw up to $10,000 from a traditional IRA without penalty as long as it covers qualified expenses. You will, however, need to pay taxes on it. But if you have a Roth IRA, you can withdraw up to $10,000 without needing to pay any taxes on the investment earnings, as long as you made the first contribution at least five years earlier.

  All Roth IRA contributions can be withdrawn penalty-free and tax-free at any time at any age because you already paid taxes on them, but this doesn’t apply to the earnings.