IRAs Tips, Info & FAQs
A tax-advantaged savings account
Simply storing your money in your sock drawer isn’t enough to prepare for a comfortable future. An IRA offers you a tax-advantaged way to save for retirement. Members can save up to a certain amount each year based on their age, and then later enjoy the fruits of their labors.
Saving for Retirement? 3 Tax Strategies to Consider
1. Make switches from your Traditional IRA to your Roth IRA
Your IRA, whether it’s a Roth IRA or a Traditional IRA, is where you should be contributing the maximum amount of your retirement savings. Which account you contribute more to depends on your circumstances. For example, if you experienced significant losses in income (a lost job, reduced hours, etc.) then there is an advantage to switching to a Roth IRA this year. It means you’ll pay the tax portion of your IRA when it will cost you less, and then transition into a tax-free growth account.
2. Contribute to Your Employer’s 401(k) Program
Often, employer-sponsored 401(k) programs will match part of what you contribute, a big savings win. Look into your own company’s plan right away, and see what advantages it can offer you.
3. Look into the Tax Saver’s tax credit
When you file your taxes, be sure to take a look at the Tax Saver’s Credit. It offers a sliding scale of tax breaks based on how much you make and how much you save. This includes retirement savings, so contributing to your IRA and 401(k) can mean considerable deductions on your taxes.
From our Blog
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 2020, single tax filers must have an income below $139,000, and married couples filing taxes jointly must have an income below $206,000, to contribute to a Roth IRA.
What is the maximum annual contribution?
In 2019 and 2020, for individuals under 50, it is $6,000 annually. People over 50 can contribute up to $7,000 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 actually require you to begin taking minimum distributions at age 70 ½, Roth IRAs do not.
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.
Next StepGo to Next Step
IRAs Rates & Calculator
Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Traditional & Roth IRAs & Education Savings Account
|Balance of $100 and Over||0.30% APY*|
*APY = Annual Percentage Yield. APY is accurate as of January 1, 2022, and may change after the account is opened. Dividends are calculated on the daily balance during the dividend period and paid to the account monthly. Fees or other conditions could reduce the earnings on the account. Payment of dividends is subject to the availability of earnings.
Certificates & IRA Certificates
|0.30% APY*||6 months|
|0.75% APY*||12 months|
|0.75% APY*||24 months|
|1.00% APY*||36 months|
|1.00% APY*||48 months|
|1.26% APY*||60 months|
*APY = Annual Percentage Yield. APY offered the period of January 1- 31, 2022. Minimum balance to earn APY $500 for Certificates. A penalty will be imposed for early withdrawal. A withdrawal of all or any portion of the principal prior to maturity will cause automatic termination of the Certificate Account. For a Certificate with a term of one year or less, the penalty will be equal to 30 days worth of dividends, whether earned or unearned, which could reduce the principal balance of the Certificate. For a Certificate with a term over one year but less than three years, the penalty will be equal to 60 days worth of dividends, whether earned or unearned, which could reduce the principal balance of the Certificate. For a Certificate with a term of three years or more, the penalty will be equal to 90 days worth of dividends, whether earned or unearned, which could reduce the principal balance of the Certificate.
Next StepGo To Next Step
IRAs Why United Texas
- Traditional IRAs
- Roth IRAs
- Coverdell Education Savings Accounts
- Contribute up to $6,000 annually
- Direct deposit available
Retirement money funds
Raquel - Thank you for your five-star review of our IRAs. We appreciate you!
Next StepGo To Next Step
IRAs How it Works
How it Works
Give us a call, contact us online, or come into any one of our branches.
Join United Texas Credit Union. All you need to do to become a member is to open a $5.00 minimum savings account.
Fill out our standard IRA application and get approved.
Choose the right IRA type for you. You may even want to consider opening multiple accounts.
Make a $100 initial deposit to start your retirement savings.
Related Products & Services
Contributions, interest, and dividends earned cannot be withdrawn until the age of 59 1/2 without incurring a penalty. Members may no longer contribute and must take mandatory distributions of the funds and earnings in the IRA the year they reach the age of 70 1/2. A 10% penalty may be assessed by the IRS if funds are prematurely withdrawn.
Please contact your tax advisor to determine which option is most suitable for your situation.